Real Estate

Ranking Asset Classes by Historical Returns (1985-2020)

Published

2 years ago

November 20, 2020

Jenna Ross

Historical Returns by Asset Class

Historical Returns by Asset Class (1985-2020)

Mirror, mirror, on the wall, is there one asset class to rule them all?

From stocks to bonds to alternatives, investors can choose from a wide variety of investment types. The choices can be overwhelming—leaving people to wonder if there’s one investment that consistently outperforms, or if there’s a predictable pattern of performance.

This graphic, which is inspired by and uses data from The Measure of a Plan, shows historical returns by asset class for the last 36 years.

Asset Class Returns by Year

This analysis includes assets of various types, geographies, and risk levels. It uses real total returns, meaning that they account for inflation and the reinvestment of dividends.

Here’s how the data breaks down, this time organized by asset class rather than year:

	U.S. Large Cap Stocks	U.S. Small Cap Stocks	Int'l Dev Stocks	Emerging Stocks	All U.S. Bonds	High-Yield U.S. Bonds	Int'l Bonds	Cash (T-Bill)	REIT	Gold
Ticker	VFIAX	VSMAX	VTMGX	VEMAX	VBTLX	VWEAX	VTABX	VUSXX	VGSLX	IAU
2020*	1.5%	-5.5%	-10.3%	-0.7%	4.9%	-0.5%	2.6%	-0.7%	-16.4%	21.9%
2019	28.5%	24.5%	19.3%	17.6%	6.3%	13.3%	5.5%	-0.1%	26.1%	15.9%
2018	-6.2%	-11.0%	-16.1%	-16.2%	-1.9%	-4.7%	1.0%	-0.1%	-7.7%	-3.2%
2017	19.3%	13.8%	23.8%	28.7%	1.4%	4.9%	0.3%	-1.3%	2.8%	9.3%
2016	9.7%	15.9%	0.4%	9.5%	0.5%	9.0%	2.5%	-1.8%	6.3%	6.6%
2015	0.6%	-4.3%	-0.9%	-16.0%	-0.3%	-2.0%	0.3%	-0.7%	1.6%	-12.3%
2014	12.8%	6.7%	-6.4%	-0.2%	5.1%	3.9%	8.0%	-0.7%	29.3%	-1.2%
2013	30.4%	35.8%	20.3%	-6.4%	-3.6%	3.1%	-0.4%	-1.5%	0.9%	-29.0%
2012	14.0%	16.2%	16.5%	16.8%	2.4%	12.5%	4.5%	-1.7%	15.7%	6.5%
2011	-0.9%	-5.5%	-15.0%	-21.0%	4.6%	4.2%	0.8%	-2.9%	5.5%	5.5%
2010	13.4%	26.0%	6.8%	17.2%	5.0%	10.9%	1.7%	-1.5%	26.6%	26.0%
2009	23.3%	32.7%	24.9%	71.5%	3.2%	35.6%	1.6%	-2.4%	26.3%	20.2%
2008	-37.0%	-36.1%	-41.3%	-52.8%	5.1%	-21.3%	5.5%	2.0%	-37.0%	5.4%
2007	1.3%	-2.7%	6.8%	33.6%	2.8%	-1.8%	0.1%	0.7%	-19.7%	25.8%
2006	12.9%	12.9%	23.1%	26.3%	1.8%	5.7%	0.5%	2.1%	31.8%	19.3%
2005	1.4%	3.9%	9.8%	27.7%	-0.9%	-0.5%	1.8%	-0.5%	8.3%	13.0%
2004	7.3%	16.2%	16.5%	22.1%	1.0%	5.2%	1.8%	-2.0%	26.7%	1.4%
2003	26.2%	43.1%	36.1%	54.7%	2.1%	15.1%	0.4%	-0.9%	33.3%	19.2%
2002	-23.9%	-21.8%	-17.6%	-9.6%	5.8%	-0.6%	4.2%	-0.7%	1.3%	20.8%
2001	-13.3%	1.6%	-23.1%	-4.4%	6.8%	1.3%	4.6%	2.6%	10.7%	-0.4%
2000	-12.0%	-5.8%	-17.1%	-29.9%	7.7%	-4.1%	5.4%	2.5%	22.2%	-9.6%
1999	17.9%	19.9%	23.6%	57.3%	-3.4%	-0.2%	-0.6%	2.0%	-6.5%	-1.7%
1998	26.6%	-4.2%	18.0%	-19.4%	6.9%	3.9%	10.2%	3.5%	-17.7%	-2.4%
1997	31.0%	22.5%	0.0%	-18.2%	7.6%	10.0%	8.9%	3.5%	16.8%	-23.2%
1996	18.9%	14.3%	2.6%	12.1%	0.3%	6.0%	8.3%	1.9%	31.4%	-7.7%
1995	34.0%	25.6%	8.4%	-1.9%	15.3%	16.2%	14.3%	3.1%	10.0%	-1.7%
1994	-1.5%	-3.1%	4.9%	-10.1%	-5.2%	-4.3%	-7.3%	1.3%	0.4%	-4.9%
1993	7.0%	15.5%	28.9%	69.4%	6.7%	15.1%	10.7%	0.2%	16.3%	13.9%
1992	4.4%	14.9%	-14.7%	7.8%	4.1%	11.0%	3.3%	0.6%	11.2%	-8.7%
1991	26.3%	40.9%	8.7%	54.5%	11.8%	25.2%	7.5%	2.5%	31.5%	-12.5%
1990	-8.9%	-22.8%	-27.9%	-16.1%	2.4%	-11.3%	-2.7%	1.6%	-20.3%	-8.3%
1989	25.5%	11.0%	5.6%	56.9%	8.6%	-2.6%	-0.6%	3.7%	3.9%	-6.8%
1988	11.3%	19.7%	22.8%	33.9%	2.8%	8.8%	4.4%	2.1%	8.6%	-19.6%
1987	0.3%	-12.7%	19.3%	9.3%	-2.8%	-1.7%	4.5%	1.3%	-7.8%	19.0%
1986	16.8%	4.5%	67.5%	10.4%	13.9%	15.6%	10.1%	5.0%	17.7%	17.9%
1985	26.4%	26.2%	50.3%	22.9%	17.6%	17.5%	7.0%	3.8%	14.6%	1.7%

*Data for 2020 is as of October 31

The top-performing asset class so far in 2020 is gold, with a return more than four times that of second-place U.S. bonds. On the other hand, real estate investment trusts (REITs) have been the worst-performing investments. Needless to say, economic shutdowns due to COVID-19 have had a devastating effect on commercial real estate.

Over time, the order is fairly random with asset classes moving up and down the ranks. For example, emerging market stocks plummeted to last place amid the global financial crisis in 2008, only to rise to the top the following year. International bonds were near the bottom of the barrel in 2017, but rose to the top during the 2018 market selloff.

There are also large swings in the returns investors can expect in any given year. While the best-performing asset class returned just 1% in 2018, it returned a whopping 71.5% in 2009.

Variation Within Asset Classes

Within individual asset classes, the range in returns can also be quite large. Here’s the minimum, maximum, and average returns for each asset class. We’ve also shown each investment’s standard deviation, which is a measure of volatility or risk.

Return Variation Within Asset Classes Over History

Although emerging market stocks have seen the highest average return, they have also seen the highest standard deviation. On the flip side, T-bills have seen returns lower than inflation since 2009, but have come with the lowest risk.

Investors should factor in risk when they are looking at the return potential of an asset class.

Variety is the Spice of Portfolios

Upon reviewing the historical returns by asset class, there’s no particular investment that has consistently outperformed. Rankings have changed over time depending on a number of economic variables.

However, having a variety of asset classes can ensure you are best positioned to take advantage of tailwinds in any particular year. For instance, bonds have a low correlation with stocks and can cushion against losses during market downturns.

If your mirror could talk, it would tell you there’s no one asset class to rule them all—but a mix of asset classes may be your best chance at success.

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Wealth

Visualized: The Most (and Least) Expensive Cities to Live In

From New York to Damascus, this infographic uses EIU cost of living data to rank the world’s most and least expensive cities to live in

Published

4 weeks ago

March 1, 2023

Freny Fernandes

Visualizing The Most (and Least) Expensive Cities to Live In

There are many benefits to living in an iconic city like New York or Singapore, but the amenities and exclusivity can come at a high cost.

Cities become “expensive” due to a variety of factors such as high demand for housing, a concentration of high-paying businesses and industries, and a high standard of living. Additionally, factors such as taxes, transportation costs, and availability of goods and services can also contribute to the overall cost of living in global cities.

The infographic above uses data from EIU to rank the world most and least expensive cities to live in. To make the list, the EIU examines 400+ prices for over 200 products and services in 172 cities, surveying a variety of businesses to track price fluctuations over the last year.

Inflation + Strong Currency = Expensive Cities

If you live in a city where many residents find it challenging to put a roof over their heads, food on their plates, and make ends meet, you live in an expensive city.

But if this inflation is compounded with a strong national currency, you may live in one of the world’s most expensive cities.

Rank	City	Country	Index Score
#1	Singapore	🇸🇬 Singapore	100
#1	New York	🇺🇸 U.S.	100
#3	Tel Aviv	🇮🇱 Israel	99
#4	Hong Kong	🇭🇰 Hong Kong	98
#4	Los Angeles	🇺🇸 U.S.	98
#6	Zurich	🇨🇭 Switzerland	94
#7	Geneva	🇨🇭 Switzerland	91
#8	San Francisco	🇺🇸 U.S.	85
#9	Paris	🇫🇷 France	84
#10	Copenhagen	🇩🇰 Denmark	83

Singapore and New York City tied for the first rank amongst the world’s most expensive cities in 2022, pushing Israel’s Tel Aviv from the first place in 2021 to the third place in 2022. Both these cities had high inflation and a strong currency. Surprisingly, this is the Big Apple’s first time atop the ranking.

The city with one of the most expensive real estate markets worldwide, Hong Kong ranked fourth in this list, followed by Los Angeles, which moved up from its ninth rank in 2021.

Poor Economies = Cheaper Cities

Asia continues to dominate the list of the world’s least expensive cities, followed by parts of North Africa and the Middle East. Though affordability sounds good at face value, sitting at the bottom of the ranking isn’t necessarily a coveted position.

While the cost of living in some of the cities in these nations is low, it comes at the price of a weak currency, poor economy, and, in many cases, political and economic turmoil.

Rank	City	Country	Index Score
#161	Colombo	🇱🇰 Sri Lanka	38
#161	Bangalore	🇮🇳 India	38
#161	Algiers	🇩🇿 Algeria	38
#164	Chennai	🇮🇳 India	37
#165	Ahmedabad	🇮🇳 India	35
#166	Almaty	🇰🇿 Kazakhstan	34
#167	Karachi	🇵🇰 Pakistan	32
#168	Tashkent	🇺🇿 Uzbekistan	31
#169	Tunis	🇹🇳 Tunisia	30
#170	Tehran	🇮🇷 Iran	23
#171	Tripoli	🇱🇾 Libya	22
#172	Dasmascus	🇸🇾 Syria	11

The decade-long conflict in Syria weakened the Syrian pound, led to a spiraling inflation and fuel shortages, and further collapsed its economy. It’s no surprise that its capital city of Damascus has maintained its position as the world’s cheapest city.

Tripoli and Tehran, the capitals of Libya and Iran, respectively, follow next on this list, reflecting their weakened economies.

Meanwhile, seven cities in Asia with the common denominator of high-income inequality and low wages dominate the list of the world’s cheapest cities. These include three Indian cities, Tashkent in Uzbekistan, Almaty in Kazakhstan, Pakistan’s most populous city of Karachi, and Sri Lankan capital–Colombo.