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Annual asset class returns ranked
Each year, asset classes reshuffle. US large-cap, small-cap, international developed, emerging markets, bonds, REITs, and commodities take turns at the top and bottom. No asset class has been #1 for more than 3 consecutive years since 1990.
Editorial commentary written by ALAN analysts. Figures cited below are analyst-authored context — they are not derived from the chart above and may reflect different windows or sources.
An investor who annually rotated into the prior year's best asset class would have underperformed a static diversified allocation by approximately 2-3% per year since 1990.
A portfolio holding equal weight across 6-7 asset classes has produced similar returns to the S&P 500 with 25-30% lower volatility and shallower drawdowns.
The visual chaos of the color-coded return table communicates unpredictability more effectively than any single number or chart. Use this in every annual review.
Set target weights across asset classes once, in writing, and rebalance to them on a calendar — with the rankings reshuffling every year, a move toward last year's leader is statistically a move toward this year's laggard.