Our Recommended Asset Classes
We have identified eight asset classes, each of which has provided strong historical returns that are not strongly correlated with those of the other seven:
|
ASSET CLASS*: |
Annualized Return |
Standard Deviation |
|
Cash and Cash Equivalents |
6.31% |
4.05% |
|
Short/Intermediate Term Fixed Income |
8.20% |
7.02 |
|
Income Equities (REITs) |
12.58% |
19.76% |
|
Large Cap Value Stocks |
12.18% |
15.88% |
|
Small Cap Stocks |
11.72% |
19.75% |
|
Large Cap Growth Stocks |
10.66% |
20.99% |
|
International Stocks |
9.49% |
22.22% |
|
Gold Related Investments |
5.88% |
26.92% |
|
CORRELATION TABLE* |
|
|
|
|
|
|
|
|
|
A) Cash and Cash Equivalents |
1.000 |
|
||||||
|
B) Short/Interm.Term Fixed Income |
.171 |
1.000 |
|
|||||
|
C) Income Equities (REITs) |
-.009 |
.051 |
1.000 |
|
||||
|
D) Large Cap Value Stocks |
.031 |
.113 |
.663 |
1.000 |
|
|||
|
E) Small Cap Stocks |
-.008 |
-.003 |
.663 |
.797 |
1.000 |
|
||
|
F) Large Cap Growth Stocks |
.016 |
.067 |
.489 |
.839 |
.835 |
1.000 |
|
|
|
G) International Stocks |
-.026 |
.051 |
.469 |
.650 |
.609 |
.636 |
1.000 |
|
|
H) Gold Related Investments |
-.066 |
.044 |
.082 |
.034 |
.087 |
.030 |
.196 |
1.000 |
*Data from Dimensional Fund Advisor Returns platform. Monthly data from 1/1979-12/2008; Default Currency USD. Asset class representation for the following chart includes: Cash= One-Month Certificate of Deposit, Short/Intermediate Term Fixed Income= Five-Year US Treasury Notes, Income Equities= Dow Jones Select REIT Index, Large Cap Value Stocks= Russell 1000 Value Index, Small Cap Stocks= Russell 2000 Index, Large Cap Growth Stocks= Russell 1000 Growth Index, International Stocks= MSCI World ex USA Index (net div.), Gold Related Investments =historical GOLD price returns. Russell data copyright © Russell Investment Group 1995-2009, all rights reserved. US long-term bonds, bills, inflation, and fixed income factor data © Stocks, Bonds, Bills, and Inflation YearbookTM, Ibbotson Associates, Chicago (annually updated work by Roger G. Ibbotson and Rex A. Sinquefield). MSCI data copyright MSCI 2009, all rights reserved. Certificates of deposit provided by Federal Reserve Statistical Release H:15: Selected Interest Rates. Dow Jones Select REIT data provided by Dow Jones Indexes.