The problem is that while stocks have rallied, most of the action is due to large-caps. This calls into question what people mean when they argue that despite last week's disappointing jobs report, the rally we've seen this year isn't over.
Is a rally not really a recovery? A quick look at some select ETFs is worthwhile to understand what's going on and what's not going on.
Below, we have the major U.S.-focused equities ETFs offered by Vanguard that focus on different-sized companies.
Over the past year, emerging market equities have lagged the broad global total market as well as the broad U.S. market.
The Vanguard MSCI Emerging Markets ETF (NYSEArca:VWO) is down 12.54 percent over the course of the year while the Vanguard Total World Stock Index Fund (NYSEArca:VT) is only down 4.26 percent, and the U.S.-focused Vanguard Total Stock Market Fund (NYSEArca:VTI) is up 5.46 percent.
Should the consumer base in the U.S. strengthen with better jobs numbers and a true reduction in the unemployment rate, we can probably expect to see some pickup in emerging market equities.
It's anyone's guess at this point, but it seems to me that investors may be leaving some money on the table with their focus on U.S. large-cap equities.
Again, it could be the nature of this unique recovery, but only time will tell.
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