Quantitative Outlook: International Equities and Silver Lead December

Welcome to our Quantitative Outlook, your monthly comprehensive guide to the latest trends and developments in Quantlake’s world of Exchange-Traded Funds (ETFs).

In December, we observed international equities and precious metals outperform, while U.S. large-cap and fixed income benchmarks delivered mixed results. Real estate and long-duration Treasuries faced renewed headwinds.

🔹 Equity Markets

Equity ETFs closed December with broad gains across developed and emerging markets, while U.S. large-cap benchmarks posted muted returns. International exposures led, with Vanguard FTSE Developed Markets (VEA) and iShares MSCI EAFE (EFA) up 3.2% and 2.7%, respectively. Emerging markets also advanced, as iShares MSCI Emerging Markets (EEM) and Vanguard Emerging Markets (VWO) rose 2.2% and 1%. U.S. value and dividend strategies delivered mixed results; SPDR Portfolio S&P 500 Value (SPYV) and Schwab US Dividend Equity (SCHD) gained 0.4%, while Vanguard High Dividend Yield (VYM) and Vanguard Dividend Appreciation (VIG) declined modestly. Growth-oriented ETFs such as Invesco QQQ Trust (QQQ) and iShares Russell 1000 Growth (IWF) slipped by 0.7% and 0.6%. Small- and mid-cap segments were generally flat to slightly negative. All equity ETF ratings remain Positive, mirroring last month’s stable outlook.

🔹 Bond Markets

Fixed income ETFs delivered mixed results in December. Short-duration and ultra-short bond exposures, including iShares Short Treasury Bond (SHV) and BlackRock Ultra Short-Term Bond (ICSH), returned 0.4%. High yield corporates such as SPDR Bloomberg High Yield Bond (JNK) and iShares iBoxx $ High Yield Corporate Bond (HYG) posted gains of 0.6% and 0.5%. Core aggregate and investment grade exposures, including iShares Core US Aggregate Bond (AGG) and iShares iBoxx $ Investment Grade Corporate Bond (LQD), declined by 0.3% and 0.7%. Long-duration Treasuries underperformed, with iShares 20 Plus Year Treasury Bond (TLT) down 2.7% and downgraded to Negative. This contrasts with last month, when long-duration exposures held a Positive rating.

🔹 Alternative Assets

Alternative ETFs saw divergent performance in December. Precious metals maintained strength, with iShares Silver (SLV) surging 25.8% and gold ETFs (IAU, GLD) each up 2.2%. Grayscale Bitcoin Trust (GBTC) declined 3.7%, a narrower loss than in November. Real estate exposures, including Vanguard Real Estate (VNQ) and iShares US Real Estate (IYR), fell 2.2%. Broad commodities (DBC) were flat, while United States Oil Fund (USO) slipped 2.7% and remains rated Negative. Compared to last month, precious metals extended their lead, while real estate reversed direction.

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Takeaways

The current landscape highlights the value of systematic diversification and disciplined rebalancing. Our approach remains grounded in patience and a long-term perspective, as asset class leadership continues to evolve.

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Happy Long-Term Investing!

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About Quantlake's Ratings

Our AI-powered ratings combine market trends, economic indicators, and unstructured data analysis. Updated monthly after the last trading day, ratings fall into two categories:

Positive: Optimistic outlook suggesting maintaining or increasing exposure

Negative: Cautious view indicating potential exposure reduction

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