2015 Asset Class Returns

For the second year in a row, the best returns available to investors during 2015 came from conservative fixed income investments, while stocks generally struggled to produce any returns and the majority of stock investments declined.

In 2014, the best returns came from long and intermediate term US Treasury bonds. In 2015, it was tax-free Municipal bonds and, again, moderately longer US Treasuries. Real Estate, which I mentioned early in the year as a key component of our long-term inflation protection for clients, was the second-best performing asset class in 2015. Although, with a positive 2.99% return on the best asset class, and average global stock returns of -2.39%, very few diversified portfolios ended the year with positive returns.

The worst returns during 2015 came from Commodities at -33.47% (oil, anyone?), and emerging markets stocks at -15.41%. The High Yield bond market also began to show serious signs of trouble during the second half of 2015, and ended the year down -5.55%.

While we are still calculating composite performance across all of our client accounts, you will be pleased to know that we maintained a strong overweight to conservative Fixed Income investments during 2015, and held steady with our target Real Estate allocation. Additionally, High Yield bonds had been previously removed from all of our model portfolios (see “Looking Ahead” from January 16th, 2015), and we only recently began to tip-toe into an allocation to Commodities in our more aggressive portfolios.

I will post a full investment review and performance of our various portfolio strategies in the coming weeks.

The following lists each of the primary asset classes and total returns for 2015 as of December 31st, using the NAV total return of the corresponding iShares ETF:

Asset ClassTicker1 Year
Source: iShares, BlackRock
National AMT-Free Muni BondMUB2.99%
U.S. Real EstateIYR1.62%
10-20 Year Treasury BondTLH1.28%
Core S&P Total U.S. Stock MarketITOT0.96%
Core U.S. Aggregate BondAGG0.48%
MSCI EAFE (International Stocks)EFA-0.90%
TIPS Bond (Inflation-Protected Bonds)TIP-1.58%
20+ Year Treasury BondTLT-1.65%
Core S&P U.S. Small-CapIJR-2.00%
MSCI ACWI (U.S. and Global Stocks)ACWI-2.39%
High Yield BondsHYG-5.55%
MSCI Emerging MarketsEEM-15.41%
S&P GSCI Commodity-Indexed TrustGSG-33.47%