2nd Quarter 2015 Asset Class Returns

2nd Quarter 2015 Asset Class Returns

Asset returns for the second quarter of 2015 were flat among most equity assets, posting returns barely over zero in the US, with higher returns internationally but still well under 1.0%. Real estate declined just over 9% — an expected pullback after returning over 40% during the previous three years.

Interest rates continued to rise from historic lows during the quarter, which contributed to declines in interest rate sensitive assets such as real estate, utilities, and bonds. Core US bonds declined 1.72% during the 2nd quarter, while long US Treasuries fell just over 9%. If there is any disruption in the Goldilocks market narrative, we could easily see interest rates resume their decline as money flows back into Treasuries as a safe-haven asset.

After many years of steady and large declines, commodities and gold are beginning to stabilize and may be establishing a long-term base for future positive returns. As is often the case, the best future returns are usually found in the assets that most investors despise today. I am watching closely for changes in this trend, and have already added several related positions to our Multi-Asset Strategy and to portfolios with concentrated equity allocations.

The following lists each of the primary asset classes and total returns for 2015 and the past one-year as of June 30th, 2015, using the NAV total return of the corresponding iShares ETF:

Asset ClassTickerYear To Date 1 Year
MSCI EAFE (International Stocks)EFA5.50%-4.36%
Core S&P U.S. Small-CapIJR4.15%6.66%
MSCI Emerging MarketsEEM2.56%-5.77%
MSCI ACWI (U.S. and Global Stocks)ACWI2.52%0.77%
Core S&P Total U.S. Stock MarketITOT1.52%7.24%
TIPS Bond (Inflation-Protected Bonds)TIP0.28%%-1.88%
Core U.S. Aggregate BondAGG-0.12%1.87%
National AMT-Free Muni BondMUB-0.23%2.41%
10-20 Year Treasury BondTLH-0.77%5.31%
S&P GSCI Commodity-Indexed TrustGSG-0.84%-37.37%
20+ Year Treasury BondTLT-5.28%6.60%
U.S. Real EstateIYR-5.43%3.10%
Source: Barclays Capital