This Was the Best-Performing Asset Class in August

At the beginning of every month, I look back to see how various asset classes performed during the previous month, which were the laggards and which were the leaders. This exercise helps me get a sense of where the market is going and what the underlying forces driving market changes are.

So for August, which asset class was best?

Just as in July, it was commodities. As a class, they rose 6.2% in August, and they're up a whopping 47.6% year to date. That's as measured by the iShares S&P GSCI Commodity-Index Trust ETF (NYSEMKT: GSG). The ETF has far outperformed the S&P 500 index, which climbed a more modest 2.7% in August and is up about 13% in 2026.

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Which commodities rose the most in August? Gold, which was up 9.9%, and crude oil, up 3.5%. Oil's price increase was driven largely by the ongoing conflict in the Persian Gulf and the blockade of the Strait of Hormuz, through which flows 20% of global oil.

Of course, Bitcoin beat them all, up about 25% during the month. It is considered a commodity by the Commodity Futures Trading Commission, though it’s not included in the CSGI Commodity Index, which holds only physical commodities.

Gold tends to move due to macroeconomic factors. Weaker U.S. economic data in recent months suggests the Federal Reserve may take a very slow and incremental approach to raising interest rates, which is good for gold. Also, the weakening of the U.S. dollar relative to other major currencies makes gold cheaper for international buyers. And central banks around the world continue to buy gold as an alternative to dollar-denominated assets. I expect all of those trends to continue.

Most asset classes rose in August

But despite commodities beating other asset classes in August, most asset classes were up during the month. Foreign stocks in both developed and emerging markets rose. U.S. stocks rose, as did U.S. bonds. And Bitcoin was up sharply -- about 25% -- during the month, driven in part, it seems, by the U.S. Treasury's intervention in bond markets, which increased liquidity, a positive development for the cryptocurrency.

Were there any major losers among asset classes? Yes, one stands out. That's U.S. real estate investment trusts (REITs), down 2.5% in August as measured by the Vanguard Real Estate Index Fund ETF (NYSEMKT: VNQ). REITs are highly sensitive to interest rates, and interest rates tend to rise with bond yields, which have been climbing in recent months. Many economists expect rates to remain elevated for the foreseeable future.

Matthew Benjamin has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard Real Estate ETF. The Motley Fool has a disclosure policy.