Asset Class ReturnsSubmitted by MidWestOne Investment Services on June 9th, 2017
Holy hot pockets! There is truly nothing like changing Iowa seasons. We had late spring in February and into March. We primarily had late winter and early spring from March into early June. And then wham, summer is here! Stay hydrated and wear lots of sunscreen if you are out and about this weekend with our Iowa City temperatures predicted into the upper 90s.
No reading in the attachment this week, but the attachment will test your eye sight for colors and lines bouncing around. With the markets returning so well with such limited volatility, I have had more conversations recently about why we own certain asset classes. In the mid-2000s, it was why didn’t we own more emerging markets, then from 2014-16 it was why do we own any emerging markets. In recent years, we have had similar issues with small caps, large caps, and other areas of the markets. The attached chart shows that over the last 20 years, a 60 stock/40 fixed portfolio would get most of the best category returns with less volatility. I am a firm believer in our long term inability to outsmart the markets, and that is why I am such a big proponent of building financial plans.
But that doesn’t mean a 60/40 portfolio is right for everyone. In some cases, your financial situation or risk appetite might allow you to take on an 80/20 or even an all equity portfolio. In other cases, the prospect of losing any money in the markets is so troubling that a 40/60, a 20/80, or possibly even a fixed income portfolio is the answer for you. We have a tool on our website to help you get a grasp on your risk appetite in real dollar value. If you haven’t been to our website to check into your Riskalyze score, I recommend taking a few minutes to figure it out and we can show how your current portfolio mix matches up to your current attitude about risk. It is fun stuff!
Thank you very much for all of your support!
No strategy assures success or protects against loss. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.