Visual Representation of Asset Class Performance Since 2003

2003 2004 2005 2006  2007 2008 2009
Small Growth 48.54% Small Value 22.25% Int’l Stock 14.02% Int’l Stock 26.86% Int’l Stock 11.63% US Bonds 5.24% Small Growth   34.47%
Small Value46.03% Int’l Stock 20.7% Large Value 8.71% Small Value 23.48% Int’l Bonds 9.48% Int’l Bonds 4.79% Int’l Stock 32.46%
Int’l  Stock 39.17% Large Value 15.03% Small Value 4.71% Large Value 20.8% Large Growth 9.13% Small Value -28.92% Large Growth 31.57%
Large Value 30.36% Small Growth 14.31% Small Growth 4.15% Small Growth 13.35% Small Growth 7.05% Large Growth -34.92% Large Value 21.18%
Large Growth 27.08% Int’l Bonds 9.27% US Bonds 2.43% Large Growth 11.01% US Bonds 6.97% Small Growth -38.54% Small Value 20.58%
Int’l Bonds 12.51% Large Growth 6.97%  Large Growth 1.14% Int’l Bonds 6.64% Large Value 1.99% Large Value -39.22% Int’l Bonds 6.93%
US Bonds 4.10% US Bonds 4.34% Int’l Bonds  -4.49% US Bonds 4.33% Small Value-9.78% Int’l Stock -43.06% US Bonds 5.93%

I love looking for patterns in things, including market movements.

It doesn’t mean I always give them meaning, but it does a good job of illustrating, if we look at the 7 years represented in table above, the importance of diversifying across different asset classes.

It’s important to get a bigger picture than just a year’s performance and to get performance relative to different asset classes.

You can see a bit of a peak with International Stock for 5 years (2003-2007), then the pain experienced in 2008.  Although it did recover quite nicely in 2009 (and continues this recovery in 2010), it illustrates the risk of volatility.

Small Value, an asset class that tends to be overlooked, did quite well in absolute terms but more interestingly in relative terms as well (with the exception of 2007).

Relative to other stock classes, it lost the least amount of value (2008).

Small Value is comprised of the Russell 2000 Value index.

It helps to look at data visually; I find that looking at data without context doesn’t  have as much significance as a table or graph.

(Disclosure: I am a Fee-Only Financial Planner. My website is here.)