—  A LOOK AT ASSET CLASS PERFORMANCES  —

There are dozens of different asset classes available to investors: large cap, mid cap, small cap, micro cap. Add in a value or growth sub-category to these. Then divide it out further into developed and emerging markets, U.S. and non-U.S. countries. And that’s just the equity side! There are perhaps even more combinations of different types of bonds: short-term, intermediate-term, long-term, corporate and government, high-yield, the list goes on and on. And finally there are the “alternative” classes which includes Real Estate Investment Trusts (REITs), Gold, Other Precious Metals, and Commodities.

These asset classes each have a different risk and return profile. Short-term treasury (government) bonds provide for low returns, but also are very low risk (measured by standard deviation). Commodities provide the greater average returns, but also come with the greatest risk. So what’s the right balance for you? Of course, only you can answer that question, but you can start by examining the graph below showing the average returns and risks of each of the major asset classes since 2000.