2010 Callan Periodic Table of Investment Returns

The utility of “Buy and Hold”, AKA Strategic Asset Allocation, was once again demonstrated in 2010.

The 2010 Callan Periodic Table of Investment Returns was recently published. A link to the Periodic Table is here.  BlackRock has a periodic table tool, which supports the creation of customized reports.  I prefer the BlackRock tool because the table includes a Diversified Portfolio. A link to the BlackRock 2010 table is here.  You can also click on the thumbnail image below.

BlackRock 2010 Asset Class Returns
Some observations:

  • Large Cap Core, AKA S&P 500 Index, continued the recovery from 2008 with a 15.06% gain in 2010, while fixed income, AKA Aggregate Bond Index, provided a steady return of 5.2% in 2008, 5.9% in 2009, and 6.5% in 2010.
  • The Diversified Portfolio is composed of 35% of the Barclays Capital US Aggregate Bond Index, 10% of the MSCI EAFE Index, 10% of the Russell 2000 Index, 22.5% of the Russell 1000 Growth Index and 22.5% of the Russell 1000 Value Index.
  • It’s impossible to predict with any certainty which asset class will “win” in 2011.
  • The Diversified Portfolio returned 12.99% in 2010, or 86.25% of the S&P 500 all equity asset class.
  • The Diversified Portfolio produced annualized returns of  8.89% , 97.26% of the S&P 500 all equity asset class.

The table is a pictorial view of the benefit of a diversified portfolio, which consistently provides relative returns in the middle of the pack.  It’s important to own a mix of stocks, bonds, and cash, diversified across multiple asset classes to reduce the volatility of returns in a portfolio.  You can see this by comparing the Diversified Portfolio returns to those of any single asset class over the years.