Q2 2022 Returns By Asset Class

This post contains the usual returns by asset class for this past quarter (by representative ETF), year-to-date, last 12 months, last five years, last ten years, and since the covid low (3/23/2020).  While there is still no predictive power in this data, I’ll continue to post this quarterly for those of you that are interested. 

Last Quarter (4/1/22-6/30/22)
Year-To-Date (1/1/22-6/30/22)
Last 12 Months (7/1/21-6/30/22)
Since Covid Low (3/23/20-6/30/22)
Last 5 Years (7/1/17-6/30/22)
Last 10 Years (7/1/12-6/30/22)

A few notes:

  • Q2 was an awful quarter for stocks across the board. Emerging markets performed best out of the major asset classes (-9%), with foreign developed (-14%), US REITs (-15%), US Large Cap (-16%), and US Small Cap (-17%) lagging behind. Continued interest rate hikes by the Federal Reserve to battle continued increases in inflation have pressured asset values and sparked fears of a sharp economic slowdown as a result. Whether we’re technically in a recession now (two consecutive quarters of negative GDP growth) or not, it’s clear that the Fed is determined to slow inflation at all costs right now, both by raising rates and via Quantitative Tightening (QT), or selling assets from their balance sheet.
  • Bonds had another tough quarter too in Q2. Long-term treasuries (TLT, not shown above) were down 13% in the quarter, now down 22% YTD as rates spiked, and prices (which are inversely correlated with rates) sank. We generally keep the bond side of client portfolios much shorter in duration, and include inflation-protected bonds, both of which faired much better again. Short-term inflation protected treasuries were only down 1.2% for the quarter., with short-term investment-grade credit down 1%.
  • Even commodities turned in negative performance for Q2. After being up as much as 11% for the quarter in early June, a sharp downturn across the board, and especially in energy delivered a -6% quarter.
  • The worst performing areas of the market in Q2 were the same as in Q1. The ARK Innovation ETF (ARKK), down almost 30% in Q1, tumbled another 40% in Q2, and is now down almost 75% from its 2021 peak. On the flip side, US value stocks are still holding up relatively well, down only 9% YTD vs. the S&P 500’s -20%.
  • Markets in general are still sharply up from the 2020 Covid lows and over the last 5 and 10 years. US Large and Small Caps have dominated global performance over the last decade.

Q1 2022 Returns By Asset Class

This post contains the usual returns by asset class for this past quarter (by representative ETF), last year, last five years, last ten years, and since the covid low (3/23/2020).  While there is still no predictive power in this data, I’ll continue to post this quarterly for those of you that are interested. 

Last Quarter (1/1/22-3/31/22)
Last 12 Months (4/1/21-3/31/22)
Since Covid Low (3/23/20-3/31/22)
Last 5 Years (4/1/17-3/31/22)
Last 10 Years (4/1/12-3/31/22)

A few notes:

  • Q1 was the first down quarter for US stocks since the start of covid. All asset classes shown above except commodities, ended the quarter down between 3.8% (Short-term corporate bonds) and -6.5% (Emerging market stocks). Causes of the poor performance include the Russia/Ukraine war, spiking energy prices, high overall inflation, the Federal Reserve’s plan to raise interest rates over the next 2 years, and a re-emergence of covid in China, likely causing more supply chain disruptions. The bright side in all of that is the performance of commodities, which returned (in aggregate), over 28% for Q1. After being down and out since the financial crisis and pummeled again by covid, commodities have come roaring back over the last two years the top performer over that period.
  • Bonds had their worst quarter since the 1980s. Long-term treasuries (TLT, not shown above) were down 11% in the quarter as rates spiked, and prices (which are inversely correlated with rates) sank. We generally keep the bond side of client portfolios much shorter in duration, and include inflation-protected bonds, both of which faired much better. Short-term inflation protected treasuries were only down 0.4% for the quarter.
  • The worst performing areas of the market in Q1 were the high-flying US growth stocks with the ARK Innovation ETF (ARKK), down almost 30% for the quarter. On the flip side, US value stocks actually had a positive 1% return for the quarter. Higher interest rates are generally viewed as a headwind for growth stocks since much of their future earnings is far off in future years. The higher interest rates are, the higher the opportunity cost of investing in distant earnings rather than current earnings (more value-oriented). Growth has outperformed value for much of the last 15 years, which is a trend that may finally be reversing.

Q4 2021 Returns By Asset Class

This post contains the usual returns by asset class for this past quarter (by representative ETF), last year, last five years, last ten years, and since the covid low (3/23/2020).  While there is still no predictive power in this data, I’ll continue to post this quarterly for those of you that are interested. 

Last Quarter (10/1/21-12/31/21)
Last Year (1/1/21-12/31/21)
Since Covid Low (3/23/20-12/31/21)
Last Five Years (1/1/17-12/31/21)
Last Ten Years (1/1/12-12/31/21)

A few notes:

  • Q4 was a very strong quarter (with a mid-quarter dip) for US Large Cap (+11%) and US Real Estate (+15%), but other asset classes fared substantially worse. US Small Caps still did well (+4%), but underperformed. Foreign stocks did worse with Developed Markets (+3%) and Emerging Markets (-0%) finishing down slightly on the quarter. US Bonds were flat to down 1% with Emerging Market Bonds down 3%. Commodities finished down ~2% after rallying strongly for the past two quarters.
  • For 2021 as a whole, the only truly poor performing asset class was Emerging Market Bonds (-10%) as the U.S. Dollar rallied and fears of a liquidity crunch in emerging markets dominated as the Fed begins to pull back on stimulus and even start raising rates in 2022. US significantly outperformed Foreign stocks as well. Real Estate (+41%) and Commodities (+29%) won the year as interest rates remained low as inflation spiked.
  • US Large Cap (S&P 500) has dominated over one, five, and ten years. The largest US stocks have performed best and gotten even larger, year after year. The top 2 companies in the S&P 500 (Apple and Microsoft), now make up 11.5% of the index. The top 10 make up 27.4% of the index. Diversified portfolios that include the other asset classes have underperformed as a result. Eventually though, this tide will reverse and smaller stocks will outperform larger ones. Foreign stocks, especially emerging markets, are about as cheap as they’ve ever been relative to the U.S. How long the dominance of a handful of US stocks can continue is anyone’s guess. But, the odds seem to favor a diversified portfolio outperforming the S&P 500 over the next few years.

Q3 2021 Returns By Asset Class

This post contains the usual returns by asset class for this past quarter (by representative ETF), year-to-date, last twelve months, last five years, last 10 years, and since the covid low (3/23/2020).  While there is still no predictive power in this data, I’ll continue to post this quarterly for those of you that are interested. 

Last Quarter (7/1/21-9/30/21)
Year-To-Date (1/1/21-9/30/21)
Last 12 Months (10/1/20-9/30/21)
Since Covid Low (3/23/20-9/30/21)
Last 5 Years (10/1/16-9/30/21)
Last 10 Years (10/1/11-9/30/21)

A few notes:

  • A solid first two months of the quarter hit an ugly September, which left Q3 mixed to slightly down overall. Commodities led the way (+8%) for the second straight quarter as supply chain issues led to shortages in many areas of the economy. The Fed has softened its opinion on the transitory nature of inflation, and are indicating a chance for costs rising higher than their 2% per year target for some time. They’ve indicated that if the employment picture continues to improve, they’re likely to start tapering their bond purchases (quantitative easing) in the coming months, with rate hikes down the road in late 2022 / early 2023.
  • Rounding out the performance numbers by asset class: US Bonds, US Large Cap Stocks, US Real Estate, and High-Yield Bonds all returned between 0-1% in Q3. On the losing side were Foreign Developed Stocks (-1.5%), US Smalls Caps (-2.5%), Emerging Market Debt (-3.5%), and Emerging Market Stocks (-7%). The stability of bonds made more conservative portfolios outperform in Q3. But, as you can see in the 5-year chart and the “since covid low” chart, overall performance across the financial markets has been superb.
  • While commodities have continued to roar back over the past 18 months, the 5 and 10-year charts show just how far they’ve lagged behind other asset classes. Commodities generally track inflation over the long-term, and they really suffered after the financial crisis, the oil glut, and the early part of covid. Now, higher inflation has been pushing commodities higher. Whether that continues or not depends on whether supply constraints ease and on how quickly global demand returns following the peak of the Delta variant of covid (and whatever variant of concern comes next).

Q2 2021 Returns By Asset Class

This post contains the usual returns by asset class for this past quarter (by representative ETF), year-to-date, last twelve months, last five years, last 10 years, and since the covid low (3/23/2020).  While there is still no predictive power in this data, I’ll continue to post this quarterly for those of you that are interested. 

Last Quarter (4/1/21-6/30/21)
Year-To-Date (1/1/21-6/30/21)
Last 12 Months (7/1/20-6/30/21)
Since Covid Low (3/23/20-6/30/21)
Last 5 Years (7/1/16-6/30/21)
Last 10 Years (7/1/11-6/30/21)

A few notes:

  • Another solid quarter in Q2 for all assets classes. Commodities led the way (+15%) as the world got a strong whip of inflation. Whether that’s transitory as the Fed expects or not, remains to be seen. Real Estate Investment Trusts (REITs) (+12%) were close behind. US Large Cap (+8%), Foreign Developed (+6%), US Small Caps (+5%) and Emerging Markets (+5%) also had great quarters. Emerging Market Bonds (+4%) were the winners in fixed income, with High Yield (+2%), US Aggregate Bonds (+2%), and Short-Term Corporate Bonds (+1%) close behind. Treasury Inflation Protected Bonds (not shown on the charts) were +3% in the quarter, again on the back of higher consumer prices.
  • While commodities have roared back over the last year, the 5 and 10-year charts show just how far they’ve lagged behind other asset classes. Commodities generally track inflation over the long-term, and they really suffered after the financial crisis, the oil glut, and the early part of covid.
  • All assets classes have shown positive returns since 3/23/20 (the Covid low), amidst the worst pandemic in a century. US Small Caps are now up 130%+ over that period, dominating the other asset classes. Just about the time that the world was assuming the worst and fearing the most as lockdowns started in the US, the bottom was in for the financial markets. Yet another, among numerous historical examples, of why it doesn’t make sense to sell in the midst of a crisis, no matter how bad it looks.

Q1 2021 Returns By Asset Class

This post contains the usual returns by asset class for this past quarter (by representative ETF), last twelve months, last five years, and last 10 years. There is no year-to-date this quarter since Q1 and year-to-date are the same. I’m also retiring the chart that shows returns since the financial crisis lows of 3/9/2009 and have replaced it with a new chart that shows returns since the covid low (3/23/2020).  While there is still no predictive power in this data, I’ll continue to post this quarterly for those of you that are interested. 

Last Quarter (1/1/21-3/31/21)
Last 12 Months (4/1/20-3/31/21)
Last 5 Years (4/1/16-3/31/21)
Since Covid Low (3/23/20-3/31/21)

A few notes:

  • Another great quarter for equities in Q1, following the spectacular Q4. US Small Caps led the way (+10.3%), followed by REITs (+8.8%), Commodities (+8%) led by energy, US Large Caps (+6.4%), Foreign Developed (+4.5%), and Emerging Markets (+4%).
  • It was a tough quarter for Bonds as interest rates rose, especially on longer-dated treasuries. The Federal Reserve indicated that they are likely to hold overnight rates at 0% through at least 2022, but longer term treasuries reacted to the increased likelihood of inflation with the US 10-yr Treasury rising to 1.74%, up from 0.93%, just a quarter ago. High-yield (“junk”) Bonds eked out a positive return (+0.6%), with US Short-Term Corporates losing 0.6%, and US Aggregate Bonds losing 3.6%. Local Currency Emerging Market Bonds fared worst at -7.1%.
  • Over the last 12 months, all assets classes have shown positive returns, amidst the worst pandemic in a century. US Small Caps are now up 120% from their Covid low on 3/23/2020.

Q4 2020 Returns By Asset Class

This post contains the usual returns by asset class for this past quarter (by representative ETF), as well as year-to-date, 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’ll continue to post this quarterly for those of you that are interested. 

Q4 2020 (10/1/20 – 12/31/20)
Last 12 Month (1/1/20 – 12/31/20)
Last 5 Years (1/1/16 – 12/31/20)
Since ’09 Bottom (3/9/09 – 12/31/20)

A few notes:

  • While US Large Cap Stocks (S&P 500) had a fantastic quarter in Q4 (+12%), Foreign Stocks, both Developed and Emerging, actually outperformed (+16-17%), and US Small Cap Stocks completely dominated (+27%), finally playing a bit of catch up and topping their all-time high set back in 2018. All major asset classes were positive for the quarter. This was a quarter where many who try to market-time suggested caution was needed given a second wave of covid, a US election that could have dire consequences, gridlock and lack of stimulus from Congress, and a climax to BrExit. Trying to time the stock market and believing you’re smarter than all other investors, in aggregate, is a fool’s game. Q4 2020 is just another example.
  • Along those same lines, just look at 2020 performance as a whole. The worst pandemic in a century and stocks end the year strongly positive almost across the board (only REITs were negative as a major asset class).
  • On the 5-year chart, we can see that even commodities have now eked out positive returns, after being down almost 25% in March of this year due to covid. It’s been a rough decade for commodities, especially energy with supply glut after supply glut, followed by a pandemic-induced bout of demand destruction. Perhaps zero interest rates are starting a new uptrend here. There’s till a lot of oil and gas out there though, so it would be difficult for a rise in energy prices to not be met with more supply coming online fairly quickly.

Q3 2020 Returns By Asset Class

This post contains the usual returns by asset class for this past quarter (by representative ETF), as well as year-to-date, 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’ll continue to post this quarterly for those of you that are interested. 

Q3 2020 (7/1/20 – 9/30/20)
Year To Date 2020 (1/1/20 – 9/30/20)
Last 12 Months (10/1/19 – 9/30/20)
Last 5 Year (10/1/15-9/30/20)
Since ’09 “Bottom” (3/9/09 – 9/30/20

A few notes:

  • Q3 was another strong quarter with positive returns across major asset classes. Commodities (+10.5%) led the way with strong gains in metals, followed by Emerging Market Stocks (+10%), and US Large Cap (+9%). Foreign Developed and US Small Cap stocks were each up 6% with High-Yield (“Junk”) Bonds up 4%. Emerging Market Bonds, Aggregate US Bonds, Short-Term US Credit Bonds, and Real Estate Investment Trusts followed with returns in the 0.5-2% range.
  • US Large Cap Stocks are the only major equity asset class that has fully recovered from the covid sell-off and is now positive on the year. US bonds (both aggregate and short-term credit) are also positive, no doubt helped by the various Federal Reserve bond-buying programs. The Fed continues to buy both corporate bond ETFs and a diversified set of individual company bonds subject to their self-defined constraints.
  • The 5-year chart shows major outperformance by US Large Caps as the largest companies have had the best returns in recent years. Large Cap Growth (not shown) has done even better as the tech sector of US Large Cap (think Facebook, Apple, Amazon, Netflix, Google, etc) has done even better. Commodities have lagged badly, as energy has been repeatedly crush, first by a glut of supply with US shale entering the market en masse, and then by a demand shock due to covid.

Q2 2020 Returns By Asset Class

This post contains the usual returns by asset class for this past quarter (by representative ETF), as well as last twelve months, last five years, and since the financial crisis lows of 3/9/2009.  I also added a year-to-date version to show how Q2’s recovery did a fairly good job at offsetting most of the Q1 damage.  While there is still no predictive power in this data, I’ll continue to post this quarterly for those of you that are interested.  Charts shown in the link below, with each on a separate page, legend at the bottom, zoom to your liking):

2020Q2 Asset Class Performance

A few notes:

  • Q2 was a hugely positive quarter, recovering a lot of the Q1 losses. US Small Caps (the worst performers in Q1) led the way in Q2 with a 26% return. US Large (+20%), Emerging Markets (+19%), and Foreign Developed (+17%) weren’t too far behind. REITs (+14%), Emerging Market Bonds (+10%), US “Junk” Bonds (+7%), and Commodities (+6%) were also strongly positive. Even the more conservative US Aggregate Bonds and US Short-Term Corporate Bonds were up 4% and 5% respectively, largely due to support from the Federal Reserve’s bond buying programs.
  • While US Large Cap stocks briefly went positive for the year in late May, the other major equity asset classes have not fully recovered their Q1 losses. With the recent pullback, year-to-date, US Large Cap is down ~3%, with US Small Caps, Foreign Developed and Foreign Emerging Markets all still down 10-12%.
  • US Bonds are now strongly positive year-to-date as interest rates have fallen and Federal Reserve support has offset credit quality concerns in the corporate sector. The Fed continues to buy both corporate bond ETFs and a diversified set of individual company bonds subject to their self-defined constraints.

Q1 2020 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 Q1 2020 for those of you that are interested.  Charts shown in the link below, with each on a separate page, legend at the bottom, zoom to your liking):

2020Q1 Asset Class Performance

Given all the recent blog posts explaining what’s going on, I’ll provide limited commentary on this.  What started as a fairly positive quarter turned ugly at the end of February and downright brutal across risky asset classes in March.  A few notes:

  • Bonds (many of which are now backed by the Federal Reserve’s purchasing power) acted as dampeners of the poor returns, as expected.  The more aggressive your portfolio, the more stocks and less bonds you have, the more magnified negative returns are for Q1.  The aggregate bond index was up 2% for the quarter while short-term corporate bonds were down about 2% due to the slightly worse, but still investment grade, credit quality of corporate bonds vs. treasuries.
  • Junk bonds and emerging market bonds outperformed equities, but still took a beating in Q1 (-12% and -16% respectively).
  • US Large Cap stocks continued to outperform small caps and foreign stocks.  But while the relative performance was better, the overall returns were still -20%.
  • US Small Cap stocks were the worst performers (-30%) and that was after a spectacular final week of the quarter.  Some portions of the Small Cap world (not shown) were even worse.  Micro Cap stocks (-35%+), US Small Cap Value (-40%+) (not shown).
  • Foreign Developed and Emerging Markets took it on the chin as well, down ~24% each.
  • Commodities in aggregate were down ~30%, but energy had it’s worst quarter of all time after Saudi Arabia & Russia decided to start a price war, pumping extra supply into the middle of the covid-19 global economic shutdown.  Energy as a whole (via Vanguard’s Energy ETF) was down 53% while Oil & Gas Equipment & Services were down a whopping 72% in Q1 alone.