Annual Asset Class Returns

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The chart below shows several issues investors struggle with all the time. It’s difficult to pick the best performing investment year after year, yet for many investors it’s an annual event. They look for an encore, picking the best asset class last year with the hope of a repeat performance. Yet, betting on last year’s winner rarely works out.

Assets at the top of the chart one year could be at the bottom the next, and vice versa. Much of this is due to reversion to the mean. But over the long-term, those big swings even out.  The chart shows annual returns for eight asset classes against a diversified portfolio. Diversification works to smooth out those big swings in the short-term. While you’ll never get the biggest gains of any year, you avoid the huge losses.

The table below ranks the best to worst investment returns by asset class over the past 15 years. Hover over the table to highlight the asset class returns. Get your copy.

Asset Class Returns

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ’14 YTD
REIT
26.4%
REIT
13.9%
HG Bnd
10.3%
EM
56.3%
REIT
31.6%
EM
34.5%
REIT
35.1%
EM
39.8%
HG Bnd
5.2%
EM
79.0%
REIT
28.0%
REIT
8.3%
REIT
19.7%
Sm Cap
38.8%
REIT
16.3%
HG Bnd
11.6%
HG Bnd
8.4%
REIT
3.8%
Sm Cap
47.3%
EM
26.0%
Int’l Stk
14.0%
EM
32.6%
Int’l Stk
11.6%
Cash
1.4%
HY Bnd
57.5%
Sm Cap
26.9%
HG Bnd
7.8%
EM
18.6%
Lg Cap
32.4%
Lg Cap
7.1%
Cash
5.8%
HY Bnd
4.5%
Cash
1.6%
Int’l Stk
39.2%
Int’l Stk
20.7%
REIT
12.2%
Int’l Stk
26.9%
AA
7.6%
AA
-22.4%
Int’l Stk
32.5%
EM
19.2%
HY Bnd
4.4%
Int’l Stk
17.9%
Int’l Stk
23.3%
EM
6.3%
AA
0.5%
Cash
3.4%
HY Bnd
-1.9%
REIT
37.1%
Sm Cap
18.3%
AA
8.9%
Sm Cap
18.4%
HG Bnd
7.0%
HY Bnd
-26.4%
REIT
28.0%
HY Bnd
15.2%
Lg Cap
2.1%
Sm Cap
16.4%
AA
11.5%
AA
6.0%
Sm Cap
-3.0%
Sm Cap
2.5%
AA
-3.8%
Lg Cap
28.7%
AA
14.1%
Lg Cap
4.9%
AA
16.7%
Lg Cap
5.5%
Sm Cap
-33.8%
Sm Cap
27.2%
Lg Cap
15.1%
AA
0.3%
Lg Cap
16.0%
HY Bnd
7.4%
HY Bnd
5.6%
HY Bnd
-5.1%
AA
-0.2%
EM
-6.0%
HY Bnd
28.2%
Lg Cap
10.9%
Sm Cap
4.6%
Lg Cap
15.8%
Cash
4.4%
Lg Cap
-37.0%
Lg Cap
26.5%
AA
13.5%
Cash
0.1%
HY Bnd
15.6%
REIT
2.9%
Int’l Stk
5.1%
Lg Cap
-9.1%
EM
-2.4%
Int’l Stk
-15.7%
AA
25.9%
HY Bnd
10.9%
Cash
3.2%
HY Bnd
11.8%
HY Bnd
2.2%
REIT
-37.7%
AA
24.6%
Int’l Stk
8.2%
Sm Cap
-4.2%
AA
12.2%
Cash
0.1%
HG Bnd
3.9%
Int’l Stk
-14.0%
Lg Cap
-11.9%
Sm Cap
-20.5%
HG Bnd
4.1%
HG Bnd
4.3%
HY Bnd
2.7%
Cash
4.7%
Sm Cap
-1.6%
Int’l Stk
-43.1%
HG Bnd
5.9%
HG Bnd
6.5%
Int’l Stk
-11.7%
HG Bnd
4.2%
HG Bnd
-2.0%
Sm Cap
3.2%
EM
-30.6%
Int’l Stk
-21.2%
Lg Cap
-22.1%
Cash
1.0%
Cash
1.4%
HG Bnd
2.4%
HG Bnd
4.3%
REIT
-15.7%
EM
-53.2%
Cash
0.2%
Cash
0.2%
EM
-18.2%
Cash
0.1%
EM
-2.3%
Cash
0.0%
Abbr. Asset Class – Index Annual Best Worst
Lg Cap Large Caps Stocks – S&P 500 Index 4.28% 32.4% -37.0%
Sm Cap Small Cap Stocks – Russell 2000 Index 7.48% 47.3% -33.8%
Int’l Stk International Developed Stocks – MSCI EAFE Index 3.96% 39.2% -43.1%
EM Emerging Market Stocks – MSCI Emerging Markets Index 8.37% 79.0% -53.2%
REIT REITs – FTSE NAREIT All Equity Index 12.94% 37.1% -37.7%
HG Bnd High Grade Bonds – Barclay’s U.S. Aggregate Bond Index 5.82% 11.6% -2.0%
HY Bnd High Yield Bonds – BofAML US High Yield Master II Index 7.89% 57.5% -26.4%
Cash Cash – 3 Month Treasury Bill Rate 1.82% 5.8% 0.1%
AA Asset Allocation Portfolio* 7.41% 25.9% -22.4%
Past performance does not guarantee future returns. The historical performance shows changes in market trends across several asset classes over the past fifteen years. Returns represent total annual returns (reinvestment of all distributions) and does not include fees and expenses. The investments you choose should reflect your financial goals and risk tolerance. For assistance, talk to a financial professional. All data are as of 6/30/14.
*Asset Allocation Portfolio is made up of 15% large cap stocks, 15% international stocks, 10% small cap stocks, 10% emerging market stocks, 10% REITs, 40% high-grade bonds, and annual rebalancing.
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