How Are Asset Classes Doing?

Thursday, December 24, 2015 | Leave a comment

2015 has been a been a frustrating year for many investors. After seeing steady growth in many markets for six consecutive years, 2015 is on target to break the trend. There are many reasons for this choppy, sideways market, which I have written about in past posts. But no matter what recent trends have shown it’s important in both good and less than favorable years to keep a larger viewpoint so that the best investment decisions can be made.

Investors that have started a new relationship with an advisor over the past year may be comparing this year’s results with returns from recent years. While doing this comparison, it’s important to view how some benchmarks have done this past year so that an accurate observation can be made.

Overall, smarter investors keep a big picture mentality and avoid falling prey to emotion induced investment decisions based on temporary market corrections, crashes, or hype. Smart investors have time tested and mathematically smart strategies that often prove superior to alternatives that are based on emotion or limited data.

The chart below shows a hypothetical $100,000 invested in a few asset classes from the start of 2007 up to 2015 year-to-date. One nice standout is that each asset class is positive over this period. However, the volatility in many of the asset classes can make many older investors in or close to retirement nervous.


A look at the shorter term returns (below) shows the difficulty asset classes have had in 2015 YTD. One immediate and painful observation is the drop in all asset classes and especially gold (IAU) this year.  A smart portfolio can adjust to this and limit or exclude a poor asset class from the portfolio mix.  The idea here is that if there is nothing good to invest in, it may make sense to stay on the sidelines—a smart portfolio can do this automatically.  In any case when markets are slipping don’t panic (never wise).  A sound investment strategy in your corner may be the best bet.


Thanks for reading and Merry Christmas!


In Market Update

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