Recent Investment Returns By Asset Class – September 2012

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Here is my monthly update of the trailing total returns for the major asset classes that I find useful. I am using passive ETFs to track asset classes, as they represent “real” investments that you can buy and sell. See August 2012 asset class returns for additional background and comparison.

Asset Class
Representative ETF
Benchmark Index
1-Mo 1-Year 5-Year 10-Year
Broad US Stock Market
Vanguard Total Stock Market (VTI)
MSCI US Broad Market Index
2.58% 30.26% 1.57% 8.73%
Broad International Stock Market
Vanguard Total International Stock (VXUS)
MSCI All Country World ex USA Investable Market Index
1.93% 13.58% -4.52% 9.44%
Emerging Markets
Vanguard Emerging Markets ETF (VWO)
MSCI Emerging Markets Index
5.32% 17.74% -1.73 16.58
REIT (Real Estate)
Vanguard REIT ETF (VNQ)
-1.84% 32.32% 2.68% 11.42%
Broad US Bond Market
Vanguard Total Bond Market ETF (BND)
Barclays U.S. Aggregate Float Adj. Bond Index
0.09% 5.00% 6.52% 5.31%
US Treasury Bonds – Short-Term
iShares 1-3 Year Treasury Bond ETF (SHY)
Barclays U.S. 1-3 Year Treasury Bond Index
0.02% 0.40% 2.69% 2.69%
US Treasury Bonds – Long-Term
iShares 20+ Year Treasury Bond ETF (TLT)
Barclays U.S. 20+ Year Treasury Bond Index
-2.32% 6.10% 11.19% 7.82%
TIPS / Inflation-Linked Bonds
iShares TIPS Bond ETF (TIP)
Barclays U.S. TIPS Index
0.50% 8.87% 7.79% n/a
SPDR Gold Shares (GLD)
Price of Gold Bullion
7.70% 9.20% 18.57% n/a

Here is a chart of the 1-year trailing returns for the major asset classes above, which I use for rebalancing. Note that I do not necessarily invest in all the listed asset classes, see my personal portfolio for more details.

Looks like nearly all asset classes are up from a year ago. Indeed, the US stock market is up over 30% from a year ago… find a guru or economist that predicted that! Over the past 10 years, the US stock market had an a 8.59% annualized return. The hyped “lost decade” looks a lot different once you simply move your timeframe a few years. The longer I invest, the less I pay attention to short-term market predictions from anyone.

* Listed are total returns (includes dividends and interest) as calculated by Morningstar as of 8/31/12. All periods longer than one year are annualized. NAV returns are listed except in the case of GLD, as there is not a significant premium/discount to NAV for the other ETFs 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, share the same underlying investments (VXUS/VTIAX, VWO/VEIEX, VNQ/VGLSX, BND/VBLTX).

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  1. Let’s see how diversification works during the next crash (2013-2014). Have fun trying to break even again after that. and after the crash after next.

  2. Good information.

    Interesting that the 10 year returns on stocks are back up to >8% range. Not long ago most people seemed to scoff at the idea that stocks would could return >8% a year as if it was a obsolete notion that stocks can provide good returns in the long haul. People are too impacted by short term movements.

  3. @Bruce Li – You may be right, but how much money are you going to bet on your prediction? I think things are rather overvalued right now too, but that’s just an opinion. If I really believed in it, I’d use options and other investment tools to lever up and get 10x+ return on my money if I was right.

  4. Jenna, Adaptu Community Manager says

    Congrats on being up!

  5. So, Bruce Li, where are you investing your money?

  6. I got into gold, palladium, platinum and silver in 2007, in size, and physical. I do not touch stocks any more, all this rise is Fed -money printing etc , which helped the PM,s too , but i am way way ahead of any stock market returns, i used to trade in and out but luckily i decided to just hold till the bull market in PM,s comes to an end , i think we still have years to go, Gold $5000 anyone?

  7. Bruce Li, what are you even trying to claim? You’re insinuating that diversification won’t “work” during the next n number of crashes, but why do you believe that? And what do you mean by “work”? If you had dollar-cost averaged into the market portfolio during the Great Depression, you would’ve come out of it with a fantastic ROI.

  8. So, I recently saw an article & video on Yahoo about Risk-Parity investing (linked below). It was basically saying you need to diversity across more than just two buckets “stocks” & “bonds”. For the “poor man’s” version of Risk-Parity investing it recommended 4 buckets: Stocks (via SPY), corporate bonds (via LQD), Treasuries (via TLT), and Commodities (via DBC). These seem to be represented above in Jonathan’s asset class by VTI (stocks), BND (corporate bonds), and SHY/TLT (treasuries). But Jonathan’s table seems to be missing a broad measure of commodities — although it does have REITs (via VNQ) and Gold (GLD) which would be part of the commodity class, but not a broad swath of that asset category. I’m really curious about this risk-parity investing thing, and would be interested in other’s comments on it.

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