Asset Class Dashboard: April 2013 update

This month’s reading of the Asset Class Dashboard shows that, while cash is still the only asset class whose most recent 12-month returns fell outside the historical typical range, returns for many asset classes moved higher above their historical averages. Pointing clients to the Asset Class Dashboard may help them contextualize the current return environment.

Asset Class Dashboard: as of April 30, 2013
April 2013 Russell Asset Class Dashboard

Large cap U.S. equity: Russell 1000 Index, Large cap Defensive U.S. equity: Russell 1000 Defensive Index, Large cap dynamic U.S. equity: Russell 1000 Dynamic Index, Small cap U.S. equity: Russell 2000 Index, Non-U.S. Equity: Russell Developed ex-U.S. Large Cap Index, Global equity: Russell Developed Large Cap Index, Emerging markets: Russell Emerging Markets Index, Commodities: Dow Jones – UBS Commodity Total Return Index, Global infrastructure: S&P Global Infrastructure Index, Global real estate: FTSE EPRA/NAREIT Developed Index, Cash: Citigroup 3-Month U.S. Treasury Bill Index, Global high yield bonds: Bank of America Merrill Lynch (BofAML) Global High Yield Index, Emerging markets debt: JP Morgan Emerging Markets Bond Index Plus, U.S. bonds: Barclays U.S. Aggregate Bond Index. Rolling returns are useful for understanding the behavior of returns over multiple time periods as opposed to looking at a single end date. Rolling returns demonstrate patterns or longer term trends in the return data. Indexes are unmanaged and cannot be invested in directly. Returns represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment.

What was normal relative to history in April 2013 – and what wasn’t?

When guiding clients through this month’s update of the Asset Class Dashboard, you can observe that:

  • as was the case last month, the most recent 12-month returns for the asset classes (represented by indexes) included in the Asset Class Dashboard fell within their respective historical typical range (the blue range bar) – except for cash, which still has historically low returns.
  • returns for many asset classes have moved even higher above their historical average (the dark blue, vertical line within the blue range bar) than was the case last month. 12-month returns for Non-U.S. Equity and Global Real Estate made the biggest jumps.
  • Emerging Markets Equity returns remained below their historical average, but the most recent 12-month returns moved the asset class up closer towards its historical average again.
  • returns for Emerging Markets Debt and Global Infrastructure, both below their historical averages last month, moved above those respective averages for the most recent 12-month period.

What might this mean for investors?

As was the case last month, the latest rendering of the Asset Class Dashboard shows that, aside from Cash, none of the asset classes look out of line with historical returns.

Of course, over time, we expect returns for all asset classes to revert to their respective historical mean. But it’s anyone’s best guess when that might happen – and it’s more likely to be a gradual process rather than a sudden change.

Strategic asset allocation and diversification do not assure profit or protect against loss in declining markets.

Indexes are unmanaged and cannot be invested in directly. Returns represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment.

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