Markets
The Fastest Rising Asset Classes in 2023
Subscribe to the Advisor Channel free mailing list for more like this
The Fastest Rising Asset Classes in 2023
This was originally posted on Advisor Channel. Sign up to the free mailing list to get beautiful visualizations on financial markets that help advisors and their clients.
Many corners of the market have shown resilience despite persistent inflation and slowing economic growth in 2023. U.S. equities, international equities, and a variety of bonds have seen positive returns so far this year.
In the above graphic, we rank the top-performing asset classes to date with data from BlackRock.
Asset Class Performance, Ranked
Here’s how select asset classes have performed in 2023 as of May 31:
| Asset Type | 2023 Return (as of May 31) | 10-Year Annualized Return |
|---|---|---|
| U.S. Equities | 9.8% | 11.9% |
| Europe Equities | 9.0% | 5.3% |
| Japan Equities | 8.8% | 5.3% |
| Investment Grade Credit | 2.8% | 1.6% |
| High Yield Bonds | 2.6% | 3.0% |
| Cash | 1.9% | 0.9% |
| Emerging Market Debt | 1.8% | 1.9% |
| Emerging Market Equities | 1.2% | 2.3% |
| Developing Market Gov. Debt | 0.9% | -0.5% |
| Infrastructure | 0.8% | 6.1% |
| REITs | -0.6% | 4.3% |
| Commodities | -6.7% | 0.0% |
| China Equities | -9.0% | 2.1% |
After a troublesome 2022 for markets, you can see above that U.S. equities have rebounded the fastest in 2023. They are sitting at 9.8% returns year-to-date.
However, this has largely been a story of a few outperformers buoying the overall market. Nvidia with 159% returns, along with Meta (120%), Apple (36%), and Microsoft (37%) are among the companies with strong growth. Many of these companies are investing billions in artificial intelligence.
European equities, at 9% returns, have also seen steady performance. Investors have flocked to the market, given the tilt to value stocks during rising rates.
Globally, bonds fall roughly in the middle of the pack, while commodities have fallen 6.7% on the year so far. China’s equity market has faced headwinds amid strained economic ties with the U.S. and economic data falling under expectations.
Bull Market On the Horizon?
Tech funds saw a record $8.5 billion in weekly inflows as of May 31, 2023 driven by AI enthusiasm.
As investors pour into these megacap stocks, S&P 500 returns have rebounded almost 20% from their October lows, moving closer into bull market territory.
As it stands, investor optimism has increased across the broader market. The investor fear gauge hovered near its lowest point since February 2020. The CBOE Volatility Index (VIX) sank to 15, a significant drop from its average reading of 23 over the past year.
Markets
The European Stock Market: Attractive Valuations Offer Opportunities
On average, the European stock market has valuations that are nearly 50% lower than U.S. valuations. But how can you access the market?
European Stock Market: Attractive Valuations Offer Opportunities
Europe is known for some established brands, from L’Oréal to Louis Vuitton. However, the European stock market offers additional opportunities that may be lesser known.
The above infographic, sponsored by STOXX, outlines why investors may want to consider European stocks.
Attractive Valuations
Compared to most North American and Asian markets, European stocks offer lower or comparable valuations.
| Index | Price-to-Earnings Ratio | Price-to-Book Ratio |
|---|---|---|
| EURO STOXX 50 | 14.9 | 2.2 |
| STOXX Europe 600 | 14.4 | 2 |
| U.S. | 25.9 | 4.7 |
| Canada | 16.1 | 1.8 |
| Japan | 15.4 | 1.6 |
| Asia Pacific ex. China | 17.1 | 1.8 |
Data as of February 29, 2024. See graphic for full index names. Ratios based on trailing 12 month financials. The price to earnings ratio excludes companies with negative earnings.
On average, European valuations are nearly 50% lower than U.S. valuations, potentially offering an affordable entry point for investors.
Research also shows that lower price ratios have historically led to higher long-term returns.
Market Movements Not Closely Connected
Over the last decade, the European stock market had low-to-moderate correlation with North American and Asian equities.
The below chart shows correlations from February 2014 to February 2024. A value closer to zero indicates low correlation, while a value of one would indicate that two regions are moving in perfect unison.
| EURO STOXX 50 | STOXX EUROPE 600 | U.S. | Canada | Japan | Asia Pacific ex. China |
|
|---|---|---|---|---|---|---|
| EURO STOXX 50 | 1.00 | 0.97 | 0.55 | 0.67 | 0.24 | 0.43 |
| STOXX EUROPE 600 | 1.00 | 0.56 | 0.71 | 0.28 | 0.48 | |
| U.S. | 1.00 | 0.73 | 0.12 | 0.25 | ||
| Canada | 1.00 | 0.22 | 0.40 | |||
| Japan | 1.00 | 0.88 | ||||
| Asia Pacific ex. China | 1.00 |
Data is based on daily USD returns.
European equities had relatively independent market movements from North American and Asian markets. One contributing factor could be the differing sector weights in each market. For instance, technology makes up a quarter of the U.S. market, but health care and industrials dominate the broader European market.
Ultimately, European equities can enhance portfolio diversification and have the potential to mitigate risk for investors.
Tracking the Market
For investors interested in European equities, STOXX offers a variety of flagship indices:
| Index | Description | Market Cap |
|---|---|---|
| STOXX Europe 600 | Pan-regional, broad market | €10.5T |
| STOXX Developed Europe | Pan-regional, broad-market | €9.9T |
| STOXX Europe 600 ESG-X | Pan-regional, broad market, sustainability focus | €9.7T |
| STOXX Europe 50 | Pan-regional, blue-chip | €5.1T |
| EURO STOXX 50 | Eurozone, blue-chip | €3.5T |
Data is as of February 29, 2024. Market cap is free float, which represents the shares that are readily available for public trading on stock exchanges.
The EURO STOXX 50 tracks the Eurozone’s biggest and most traded companies. It also underlies one of the world’s largest ranges of ETFs and mutual funds. As of November 2023, there were €27.3 billion in ETFs and €23.5B in mutual fund assets under management tracking the index.
“For the past 25 years, the EURO STOXX 50 has served as an accurate, reliable and tradable representation of the Eurozone equity market.”
— Axel Lomholt, General Manager at STOXX
Partnering with STOXX to Track the European Stock Market
Are you interested in European equities? STOXX can be a valuable partner:
- Comprehensive, liquid and investable ecosystem
- European heritage, global reach
- Highly sophisticated customization capabilities
- Open architecture approach to using data
- Close partnerships with clients
- Part of ISS STOXX and Deutsche Börse Group
With a full suite of indices, STOXX can help you benchmark against the European stock market.
Learn how STOXX’s European indices offer liquid and effective market access.
-
Economy2 days agoEconomic Growth Forecasts for G7 and BRICS Countries in 2024
The IMF has released its economic growth forecasts for 2024. How do the G7 and BRICS countries compare?
-
Markets1 week agoU.S. Debt Interest Payments Reach $1 Trillion
U.S. debt interest payments have surged past the $1 trillion dollar mark, amid high interest rates and an ever-expanding debt burden.
-
United States2 weeks agoRanked: The Largest U.S. Corporations by Number of Employees
We visualized the top U.S. companies by employees, revealing the massive scale of retailers like Walmart, Target, and Home Depot.
-
Markets2 weeks agoThe Top 10 States by Real GDP Growth in 2023
This graphic shows the states with the highest real GDP growth rate in 2023, largely propelled by the oil and gas boom.
-
Markets2 weeks agoRanked: The World’s Top Flight Routes, by Revenue
In this graphic, we show the highest earning flight routes globally as air travel continued to rebound in 2023.
-
Markets2 weeks agoRanked: The Most Valuable Housing Markets in America
The U.S. residential real estate market is worth a staggering $47.5 trillion. Here are the most valuable housing markets in the country.
-
Education1 week agoHow Hard Is It to Get Into an Ivy League School?
-
Technology2 weeks agoRanked: Semiconductor Companies by Industry Revenue Share
-
Markets2 weeks ago
Ranked: The World’s Top Flight Routes, by Revenue
-
Demographics2 weeks agoPopulation Projections: The World’s 6 Largest Countries in 2075
-
Markets2 weeks ago
The Top 10 States by Real GDP Growth in 2023
-
Demographics2 weeks agoThe Smallest Gender Wage Gaps in OECD Countries
-
Economy2 weeks agoWhere U.S. Inflation Hit the Hardest in March 2024
-
Green2 weeks agoTop Countries By Forest Growth Since 2001