Just came across this pretty nice interactive graphic from Wealthfront which shows how the annual returns of 11 different asset classes compare with one another, from 2003 to 2012. If you hover over any asset class, it will highlight it by greying out the rest so you can see how its ranking changes across the years.
The article makes a case for diversification across (i) asset classes, (ii) assets within each asset class, and (iii) time (dollar-cost averaging).
The asset classes shown are:
- U. S. stocks
- Foreign stocks
- Dividend stocks
- Emerging markets
- Real estate
- Natural resources
- Municipal bonds
- Corporate bonds
- Emerging bonds
- U.S. Government bonds
Some of things that stand out are:
- Strong correlation among asset classes
- In 2008, apart from U.S. Government Bonds, all other asset classes had negative returns.
- From 2003-2006, and 2009-2010, all asset classes had positive returns.
- In 2012, all asset classes had positive returns except for Natural Resources.
- Top winner
- Emerging market stocks performed extremely well from 2003-2007 (ranking 1st or 2nd), but crashed down ~55% in 2008 (ranking last), though it recovered by 2010 when it went up ~100% over 2 years.
- Most consistently average performer
- Corporate bonds
- Dividend stocks performance
- Returns of dividend stocks generally compare well with the returns of U. S. stocks.
- Ranking in terms of worst annual return
- U.S. Government bonds: +2.4% (no down year)
- Muni bonds: -0.1%
- TIPS: -1.7%
- Corporate bonds: -6.2%
- Dividend stocks: -31.0%
- EM bonds: -33.5%
- Natural resources: -35.6%
- U.S. stocks: -37.3%
- Real estate: -37.3%
- Foreign stocks: -45.1%
- EM stocks: -54.5%
- Callan Periodic Table of Returns: http://www.callan.com/research/periodic/