Investment Returns By Asset Class – 2012 Annual Returns, Year-End Update

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Happy New Year! 2012 has come to an end, which makes this monthly update into an annual wrap-up of the trailing total returns for selected asset classes. Passive ETFs are used to represent major asset classes, as they represent actual investments that folks can buy and sell. Return data was taken after market close at the end of December 2012.

Asset Class
Representative ETF
Benchmark IndexBroad US Stock Market
Vanguard Total Stock Market (VTI)
MSCI US Broad Market IndexBroad International Stock Market
Vanguard Total International Stock (VXUS)
MSCI All Country World ex USA Investable Market IndexEmerging Markets
Vanguard Emerging Markets ETF (VWO)
MSCI Emerging Markets IndexREIT (Real Estate)
Vanguard REIT ETF (VNQ)
MSCI US REIT IndexBroad US Bond Market
Vanguard Total Bond Market ETF (BND)
Barclays U.S. Aggregate Float Adj. Bond IndexUS Treasury Bonds – Short-Term
iShares 1-3 Year Treasury Bond ETF (SHY)
Barclays U.S. 1-3 Year Treasury Bond IndexUS Treasury Bonds – Long-Term
iShares 20+ Year Treasury Bond ETF (TLT)
Barclays U.S. 20+ Year Treasury Bond IndexTIPS / Inflation-Linked Bonds
iShares TIPS Bond ETF (TIP)
Barclays U.S. TIPS IndexGold
SPDR Gold Shares (GLD)
Price of Gold Bullion

Here is a chart of the 1-year trailing returns for the major asset classes above (also 2012 total annual returns), which I use to help decide where to invest new funds and for rebalancing. Note that I do not necessarily invest in all the listed asset classes, see my personal portfolio for details.

Every single asset class ended up in the green, with equities overall having a very strong year despite lots of continued uncertainty. I haven’t bothered to look, but I remember most forecasts from this time last year predicting a “sideways” market. I see 2012 as another year where it was helpful to ignore all the short-term predictions and instead focus on long-term returns.

* Listed are total returns (includes dividends and interest) as calculated by Morningstar as of 12/31/12. All periods longer than one year are annualized. NAV returns are listed, as there is not a significant premium/discount to NAV (except for GLD) and the NAV returns match the equivalent Vanguard mutual fund returns. In certain cases, I am using the long-term returns of the equivalent Vanguard mutual funds as Vanguard ETFs are simply a different share class of the mutual funds, share the same underlying investments (VXUS/VTIAX, VWO/VEIEX, VNQ/VGLSX, BND/VBLTX).

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