Q3 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 Q3 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):

2019Q3 Asset Class Performance

A few call-outs from the data:

  • Q3 was a mixed bag of results that really show the benefits of diversification.  Despite claims that all asset classes move together in a “risk-on” or “risk-off” manner these days, returns were all over the board.  US Real Estate Investment Trusts (REITS) saw the best performance (+7.5%) on the back of declining interest rates.  US aggregate bonds (+2.4%), US Large Cap Stocks (+1.7%), High-Yield Bonds (+1.3%) and Short-term Corporate Bonds (+1.2%) rounded out the positives.  On the other side were Foreign Developed Stocks (-0.9%), US Small Cap Stocks (-1.5%), Commodities (-2%), Emerging Market Bonds (-3.3%), and Emerging Market Stocks (-4.2%).  While not particularly evident in the chart, there was a shift, most notably in August, from Large Cap Growth Stocks toward Smaller Cap Value stocks.  It’s hard to read anything into a couple of months, but it would be very healthy for the market to rotate in this direction as valuations are actually below average in Small Cap Value stocks vs. Large Cap Growth where valuations are well above average on a Price to Earnings basis.
  • Interest rates continued their shocking rate of decline in Q3 with the US 10-year yield dropping to 1.46% in early September and the US 30-year yield dropping to an all time low of 1.94% in late August, before both normalized a bit into end of quarter.  Declining rates cause bond prices to rise, leading to the solid performance for US bonds in Q3 and over the last 12 months, outperforming everything other than REITs.
  • On the long-term chart, you can continue to see 1) the massive outperformance of US stocks and REITs 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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