The "asset quilt" below shows returns of major asset classes in each of the last 13 years, as well as returns over the total 13-year span.
The best-performing investments: emerging-market stocks, gold, and real estate investment trusts.
The worst-performing investments: commodities, market-neutral hedge funds, and the S&P 500.
In a note to clients, Oppenheimer chief investment strategist John Stoltzfus writes: The more consistent outperformance of assets such as emerging markets, gold and REITs in 12 of the 13 years just ended makes sense to us as the effects of greater leverage, whether based in monetary, fiscal, corporate or household policy, tends to favor classic inflation hedges such as these.
The inclusion of the emerging markets (EMs) with gold and REITs as an outperformer in the period makes sense to us and more than likely points to the emerging markets as being favorably tied to hard assets, either as a source in the discovery or production of the same, or EMs' dependence on materials as an input for production that is ultimately designated to meet export demand. That said, commodities themselves were poor performers overall.
For us, the total return quilt points to the quintessential importance of the age-old adage, "Don’t keep all your eggs in one basket." Diversification across asset classes is a key discipline not to be taken lightly or ignored by investors, particularly those who care for performance year to year.
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