Thursday, January 29, 2015

Periodic Table of Investments - 2014

REITs (Real Estate Investment Trusts) led the way with a 30.4% gain during 2014.  REITs also had the lowest correlation to the S&P 500 for any asset class besides bonds.  The low correlation of REITs to equities makes it an important piece of a diversified portfolio.  Long Term Treasuries posted the second largest gain for the year at 27.5% boosted by falling interest rates.

This chart shows the annual returns for fifteen different asset classes over the last twenty years illustrating the importance of diversification across asset classes. Returns are sorted from best to worst for each year. Clicking on the index name on the left hand side will highlight the returns for that index for each year.


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It is important to note that using charts and graphs to help make investment decisions has many limitations.  Economic data is often revised after the fact.  The market is forward looking and anticipates future events.  The unexpected can and will happen.  The market is continually changing.  The conditions of the past are different from the present. 

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