Investment Returns By Asset Class: Mid-2013 Update

We’ve reach the midway point of 2013, and here are the returns of the major asset classes as benchmarked by passive mutual funds and ETFs. Return data was taken after market close at the end of June 2013. I’m still tweaking the format, in the hopes of making it easier to understand. Below is a chart of the all the trailing total returns for year-to-date, trailing 1-year, and trailing 10-year periods.

Market Commentary

The big news recently is the Fed talking about possibly tapering off its quantitative easing. Since that drove interest rates up, bond prices fell. I think this was a good reminder that we are in abnormal times, with the super-low interest rates being artificially depressed and that one day we will revert back to the mean. Even though my bond holdings fell as well, I’m fine with that if that’s a result of a healthy stock market and it means higher interest rate payouts in the future.

Stocks prices have pulled back a bit recently, but are still well above levels from a year ago. If you bought and held since 2009, you’re still happy. Gold has dropped nearly 30% since the beginning of the year. I just don’t understand gold prices, which is why I don’t own it. I can see a place for it as a diversifier, but it just seems too volatile and speculative to be considered “real money”.

The details:

(Below is the same stuff at the end of every update)
I collect this information because it allows me to keep an eye on the market while still keeping the long-term returns in perspective. Often, the asset classes with the best long-term returns have had recent poor performance. The 1-year chart helps me decide where to invest new funds and for rebalancing. Note that I do not necessarily invest in all the listed asset classes, see my personal portfolio for details.

* Listed are total returns (includes dividends and interest) as calculated by Morningstar as of 6/30/13. All periods longer than one year are annualized. NAV returns are listed, as there is not a significant premium/discount to NAV (except maybe for GLD) and the NAV returns match the equivalent Vanguard mutual fund returns. In certain cases, I am using the long-term returns of the equivalent Vanguard mutual funds as Vanguard ETFs are simply a different share class of the mutual funds and thus share the same underlying investments (VXUS/VTIAX, VNQ/VGLSX, BND/VBLTX).

**10-Year returns for TIP are estimated using Barclays US Treasury Inflation Protected Index (tracked here) minus 0.20% expense ratio. 10-Year returns for GLD are estimated using spot price of gold from Kitco minus 0.40% expense ratio.