This article is part of a regular series of thought leadership pieces from some of the more influential ETF strategists in the money management industry. Today's article is by Deepika Sharma, managing director of investments and portfolio manager at Astor Investment Management.
As we look back on 2016, a notable theme is just how wrong the markets were when it came to predicting events and risk drivers.
The year began on a pessimistic note. By the Feb. 11 low, the S&P 500 had lost more than 10%, and high-yield bonds were down more than 5%. A major culprit was sharply declining oil prices; WTI crude was down nearly 30%, which drove down commodities as a whole.
Market jitters were also caused by expectations that China’s growth rate was going to fall short, which further compounded concerns about global growth in general.
Much Different Picture
Now, at year end, the picture looks much different. Global growth in 2016 couldn’t have been better. In the U.S., a third-quarter GDP reading of 3.2% exceeded expectations.
As for market performance, year-end is nearly a mirror opposite of what occurred at the start of the year. From January through end-November, the S&P 500 is up about 10%. High-yield bonds are up more than 15% year-to-date, and oil has gained almost 25%.