These Were the Best-Performing Asset Classes in May. Can They Continue to Lead?

May was a good month for most asset classes. U.S. stocks and international stocks (both developed and emerging market) advanced strongly during the month. Several bond categories were also up for the month, including both investment-grade and junk (high-yield) bonds, as well as inflation-protected bonds.

But the biggest winner for May was U.S. stocks, as measured by the Vanguard Total Stock Market Index ETF (NYSEMKT: VTI), which tracks the entire investable U.S. equity market. That ETF climbed 5.2% during the month. The largest subset of U.S. stocks by market cap, the S&P 500 index, rose 5.3% in May, extending the index's 3.5-year bull market by another month (the current bull market began in October 2022).

Tech stocks did even better. The Nasdaq-100 index, which is tracked by the Invesco QQQ ETF Trust (NASDAQ: QQQ), soared 10.6% in May. Several mega-cap tech stocks significantly outperformed, with Micron Technology up 89% over the past month, Advanced Micro Devices up 41%, and Oracle 40% higher.

Foreign developed-market stocks ranked second among major asset classes. As measured by the Vanguard FTSE Developed Markets ETF (NYSEMKT: VEA), those stocks were up 4.3% in May. Emerging market stocks, as measured by the Vanguard FTSE Emerging Markets ETF (NYSEMKT: VWO), rose 1.6% during the month.

Gains in tech stocks should continue to lead the way

Can those same asset classes continue to lead the way in June?

I think they can. U.S. equity indexes are being driven higher by mega-cap technology stocks, which continue to benefit from the massive artificial intelligence infrastructure build-out. So-called hyperscalers are spending over $1 trillion a year on data centers, a figure that is expected to reach $4 trillion by 2030.

Image source: Getty Images.

International developed market stock indexes were also boosted by the AI build-out. Korea's Samsung Electronics and SK Hynix, along with ASML Holding of the Netherlands, all soared during the month. All three are major players in the global semiconductor manufacturing supply chain.

Finally, which asset classes performed poorly in May?

Commodities. They fell 7.5% during the month, led by the top category of commodities, crude oil, which plunged 12.2% in May. That figure isn't overly significant, in my opinion. Oil prices are set globally and have been highly volatile since the beginning of the war in the Persian Gulf and the closure of the Strait of Hormuz. The price of gold also fell 1.5% in May. It, too, is closely linked to the price of oil and the value of the dollar relative to other currencies and has been affected by the same conflict.

Matthew Benjamin has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Advanced Micro Devices, Micron Technology, Oracle, Vanguard FTSE Developed Markets ETF, and Vanguard FTSE Emerging Markets ETF. The Motley Fool has a disclosure policy.