A Look Back at 2017 Asset Class Returns
The Veater Financial Table of Investment Returns ranks the annual performance of key asset classes over each of the last 20 years. The best asset class for a given year is listed at the top, with the lowest returning asset class listed at the bottom. Below are a few key takeaways as we look back on 2017:
- The Dow Jones Industrial Average (DJIA) returned +24.39% in 2017. Using a calculation which includes dividend reinvestment, the Dow Jones returned +28.11%
- The best asset class for the year, emerging markets, returned +34.01%. Last year's best asset class, the Russell 2000, gave us a return of +22.11%. Please note the shifts in asset classes. Take a look at the EAFE (Europe, Australasia, Far East) Index back in 2016 and compare the return for 2017. Quite a shift to say the least!
- The DJIA set a record-breaking number of all-time peaks. On December 28, 2017 the Dow hit its 71st record close of the year. Although we have enjoyed economic recovery and growth, we must stay the course and continue to diversify, rebalance our portfolio, and provide protection in any market.
One of the key conclusions that we draw when looking at how the stock and bond markets perform over time is the importance of diversifying one’s investment assets. No asset class stays at the top. There is a constant rotation in what is performing well during any given year. And we believe that the most prudent and likely way to generate desirable risk-adjusted returns is to maintain diversification across asset classes. Note that the chocolate box you see on this chart represents a “Moderate Growth” style of investing. It diversifies across the various asset classes listed and historically can create a more consistent return.
"Moderate Growth" is a hypothetical portfolio for illustrative purposes, and is not representative of any investment, account, or portfolio offered by Veater Financial Group.
Stock investing involves risk including loss of principal.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
High yield/junk bonds (grade BB or below) are not investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.
International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
No strategy, including asset allocation, assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. Strategies and investments mentioned may not be suitable for all investors.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.