Q2 2019 Returns By Asset Class

For the last several quarters, I’ve posted returns by asset class (by representative ETF), as well as last twelve months, last five years, and since the financial crisis lows of 3/9/2009. While there is still no predictive power in this data, I updated those charts as of the end of Q2 2019 for those of you that are interested.  Charts shown in the link below, now more readable with each on a separate page, legend at the bottom, zoom to your liking):

2019Q2 Asset Class Performance

A few call-outs from the data:

  • After a fantastic Q1 that almost erased Q4 2018 losses, Q2 2019 was another solid quarter, with only commodities (oil still struggling) in the red.  Emerging Market Bonds led the way (+5.8%), followed by US Large Cap (+4.2%), Foreign Developed (+3.2%), Aggregate US Bonds (+3.1%), US Small Caps (+2.9%), Short-term Corporate Bonds (+2%), REITs (+1.5%), and Emerging Markets (+0.8%).  Commodities finished the quarter down 1.9%.  Probably the biggest surprise was the performance of bonds, as the interest rate landscape changed dramatically, with rates falling from already historically low levels and expectations for multiple upcoming Federal reserve rate cuts getting priced in.  The US 10-year treasury bond currently trades with a yield of about 2%…  that means lending your money to the government for 10 years (!!!) to earn an annual rate equal to the inflation rate that the Federal Reserve targets.  As crazy as that sounds, rates around the globe are even lower, with many developed countries in negative territory.  Germany’s 10-year bond yields -0.32% and Japans yields -0.16%.  That means you pay the government to hold your money in those countries.
  • On the chart that shows the last 12 months, the ongoing divergence of US and non-US markets is evident with US Large Caps (think S&P 500) up over 10% and Foreign Developed flat (+0.1%).  This is explained by the relative strength of the US economy and the US Dollar vs. the rest of the global economy and other currencies.  This is even clearer on the 5-year and “since the bottom” charts.  Of course US equity valuations are much higher than the rest of the globe (i.e. the US stock market is relatively more expensive given the stronger economic outlook).  One other note is that while US Large is approaching all-time highs (and hit all time highs today, 7/1), US Small Caps have lagged dramatically, up only ~2% over the past 12 months and still well below their all-time highs.
  • In the long-term chart, you can continue to see 1) the massive outperformance of US stocks since the financial crisis, with Q4 2018’s meldown as just a blip on the radar 2) the slow and steady stable grown of bonds, and 3) the utter devastation in commodities, still down ~30% from March 2009.

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