Real Estate

Ranking Asset Classes by Historical Returns (1985-2020)

Published

3 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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Real Estate

Ranked: 15 of the World’s Least Affordable Housing Markets

This map examines middle-income housing market affordability across eight major countries, highlighting some of the least affordable cities.

Published

1 day ago

September 29, 2023

Avery Koop

Mapping housing market affordability and some of the least affordable cities

Ranked: 15 of the World’s Least Affordable Housing Markets

When considering where to live, big cities are attractive to people for a number of reasons, but affordability is usually not one of them.

This map, using data from Demographia, highlights the major cities ranked the worst for housing market affordability on a global basis.

Unaffordable Housing Markets

Demographia’s report looks at middle-income housing affordability in 94 cities in eight countries, many of which are known for having pricy housing markets:

🇦🇺 Australia
🇨🇦 Canada
🇨🇳 China (Hong Kong)
🇮🇪 Ireland
🇳🇿 New Zealand
🇸🇬 Singapore
🇬🇧 United Kingdom
🇺🇸 United States

For the 2023 report, it uses 2022 Q3 prices and income levels for evaluation, dividing the median house price by the gross median household income to find the median multiple for housing.

And for the first time in the history of Demographia’s reporting, not a single of the 94 cities scored below 3.0, the cutoff to be deemed “affordable.” Here’s a closer look at the least affordable markets in 2023:

Rank	City	Housing Median Multiple
1	🇭🇰 Hong Kong	18.8
2	🇦🇺 Sydney	13.3
3	🇨🇦 Vancouver	12.0
4	🇺🇸 Honolulu	11.8
5	🇺🇸 San Jose	11.5
6	🇺🇸 Los Angeles	11.3
7	🇳🇿 Auckland	10.8
8	🇺🇸 San Francisco	10.7
9	🇦🇺 Melbourne	9.9
10	🇨🇦 Toronto	9.5
11	🇺🇸 San Diego	9.4
12	🇬🇧 London	8.7
13	🇺🇸 Miami	8.5
14	🇦🇺 Adelaide	8.2
15	🇬🇧 Bournemouth & Dorset	8.0

For well over a decade now, Hong Kong has taken the top spot as the least affordable market globally. The only city to become even less affordable year over year was Los Angeles.

On the flip side, the most affordable city in the U.S. was Pittsburgh, with the median multiple sitting at 3.1. As people start to get priced out of certain markets, they may start to move to these more affordable cities.

Zooming out farther, here are the housing market affordability scores for all eight jurisdictions covered in this report:

Country / Jurisdiction	Housing Median Multiple
🇭🇰 Hong Kong	18.8
🇳🇿 New Zealand	10.8
🇦🇺 Australia	8.2
🇨🇦 Canada	5.3
🇸🇬 Singapore	5.3
🇬🇧 UK	5.3
🇮🇪 Ireland	5.1
🇺🇸 U.S.	5.0

Again, none of these countries are considered affordable, but within each there is a wide range of scores. Hong Kong is significantly less affordable than the second-place New Zealand and third-place Australia.

Scores across Canada, Singapore, the UK, Ireland and the U.S., however, are quite similar.

Better Cities for Housing Market Affordability

While many people flock to big cities, evidenced by the fact that many of the least affordable places are also among the most populous, others are opting to live somewhere more in their price range.

Here’s a glance at some of the most affordable housing markets worldwide:

Rank	City	Housing Median Multiple
1	🇺🇸 Pittsburgh, PA	3.1
2	🇺🇸 Rochester, NY	3.2
3	🇺🇸 Cleveland, OH	3.5
3	🇺🇸 St. Louis, MO-IL	3.5
5	🇺🇸 Cincinnati, OH-KY-IN	3.6
5	🇺🇸 Oklahoma City, OK	3.6
7	🇺🇸 Buffalo, NY	3.7
8	🇺🇸 Detroit, MI	3.8
9	🇺🇸 Louisville, KY-IN	3.9
9	🇺🇸 Tusla, OK	3.9
11	🇨🇦 Edmonton, AB	4.0
11	🇺🇸 Hartford, CT	4.0
11	🇺🇸 Kansas City, MO-KS	4.0
14	🇺🇸 Columbus, OH	4.1
14	🇺🇸 Grand Rapid, MI	4.1
14	🇺🇸 Indianapolis, IN	4.1
14	🇺🇸 Minneapolis-St. Paul, MN-WI	4.1
14	🇺🇸 Philadelphia, PA-NJ-DE-MD	4.1

All of the top 18 most affordable cities covered in the report are located in North America.

While big, global cities will certainly continue to attract talent and residents from all over, the more affordable cities may gain new residents for more practical financial reasons.