CapitalTime
Articles on investing and capital management, with a quantitative focus.
Peeking at Asset Class Performance
2023-11-28
I try to focus on my overall portfolio performance, but today I peeked at the individual asset classes to look at how they have performed since I began using this portfolio.
The time period is 7.7 years. Based on the government’s CPI figures, inflation over this period has been approximately 3% annualized, with some very high inflation in the last three years. This performance is based on CAD currency, but USD-based returns are very similar.
| Portfolio asset | Nominal CAGR | Real return |
|---|---|---|
| XIU: TSX 60 stocks (Canada) | 8.9% | +6% |
| ZSP: S&P 500 stocks (US) | 13.2% | +10% |
| XBB: bond market (Canada) | 0.9% | -2% |
| CGL.C: gold bullion | 6.6% | +4% |
Bond performance has been terrible. It’s the only asset class in the portfolio with a negative real return.
One should never extrapolate returns, because asset class performance is notoriously unpredictable. However, these results are what one would expect in a high-inflation period: pretty good returns in stocks and gold, but poor (negative) real returns in bonds.
— Jem Berkes