2 min read
It’s difficult to predict which asset classes will perform best from one year to the next.
To illustrate just how difficult it is to predict, check out the grid below which shows the annual returns of 11 different asset classes sorted from best to worst returns for each year since 2000:
The chart below shows the growth of a hypothetical $100,000 investment in each asset class since 2000:
Some Interesting Observations
- Precious metal stocks had the highest annual volatility by far, followed by emerging market stocks
- Precious metal stocks were either in the top two highest or bottom two lowest returns by asset class for 17 out of the 18 years
- Precious metal stocks experienced the highest single year loss of any asset class in 2008 (-56%) and the highest single year gain of any asset class in 2009 (76.5%)
- Precious metal stocks were the best performing asset class from 2000 to 2013
- The total U.S. bond market only experienced one year of negative returns (-2.3% in 2013)
- The total U.S. bond market easily outperformed International stocks, European stocks, and Asia-Pacific stocks during this time period with far less volatility.
- REITs were in the top two asset class returns in 8 out of the 18 years.
- A $100,000 investment in REITs as an asset class in 2000 would have grown to $680,000 by the end of 2017.
- A $100,000 investment in Asia-Pacific stocks as an asset class in 2000 would have grown to only $165,000.
- Not including bonds, U.S. large cap stocks experienced the lowest volatility during this time period.
- U.S. large cap stocks, International stocks, and the total U.S. stock market were never in the top two performing asset classes in any year.
- Emerging market stocks and precious metals experienced the biggest losses in the crash of 2008, but subsequently experienced the biggest gains in 2009.
- U.S. Mid Cap stocks outperformed U.S. Small Cap stocks and did so with lower volatility.
- The total U.S. bond market was the only asset class to experience positive returns during the crash of 2008.
- The total U.S. bond market outperformed the total U.S. stock market from 2000 to 2016.
All of the charts in this post were made using Microsoft Excel. Find out how to make similar charts using The Excel Genius Toolkit.
Zach is the author behind Four Pillar Freedom, a blog that teaches you how to build wealth and gain freedom in life.
Zach's favorite free financial tool he's been using since 2015 to manage his net worth is Personal Capital. Each month he uses their free Investment Checkup tool and Retirement Planner to track his investments and ensure that he's on the fast track to financial freedom.
Although the bulk of his net worth is invested in index funds, his favorite place to invest in individual stocks is M1 Finance, a site that allows you to build a custom portfolio of stocks for free.
His favorite way to save money each month on his recurring bills is by using Trim, a free financial app that negotiates lower cable, internet, and phone bills with any provider on your behalf.
His favorite place to find new personal finance articles to read is Collecting Wisdom, a site that collects the best personal finance articles floating around the web on a daily basis.
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