February 13, 2025

The chart below, from Novel Investor (https://novelinvestor.com/asset-class-returns/) shows how difficult it is to pick the best performing asset class year after year. Many investors pick the best asset class from the previous year and assume that it will continue to outperform the others. The chart shows that this rarely happens.

Asset Class Returns Last 15 Years

The "AA" class represents the Asset Allocation Portfolio, which is made up of 15% U.S. large cap stocks, 15% non-U.S. developed market stocks, 10% U.S. small cap stocks, 10% emerging market stocks, 10% REITs, 40% U.S. high-grade bonds, and annual rebalancing.

About the author 

Erik Conley

Former head of equity trading, Northern Trust Bank, Chicago. Teacher, trainer, mentor, market historian, and perpetual student of all things related to the stock market and excellence in investing.

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