The Asset Allocation Quilt 2003-2017

Some people refer to the picture below as an asset allocation quilt. Others might call it the “periodic table of investment returns.”  It resembles the chart of elements we used to see in science class.

(Click here to download a page sized pdf file of the chart.  You can download Adobe Acrobat Reader for free here).

You can see why some refer to it as the “Periodic Table of Investment Returns”

Asset Allocation

What do You See?

Eleven asset classes make up the chart.  More asset classes exist, but these seem to be the most common.

  • Large cap, mid cap, and small cap US Stocks;
  • international stocks, emerging market stocks;
  • short, intermediate, and long-term bonds;
  • Alternative assets like real estate, basic materials, and gold.

The columns on the left rank the annual returns from best to worst for each asset class.  The columns on the right show the 3, 5, 10, and 15 year compounded returns of each asset class.  The compounded returns are also ranked from best to worst for each period.


Constructing Portfolios is Hard

Have you found any patterns which repeat?  Maybe you see something which indicates what is going to be either bad or good based on previous years.  No?  We don’t see anything like that either.  There are no real patterns to the annual returns.  This poses challenges when constructing portfolios.  That process would be much easier if there were patterns or some reliable indicator.

We believe these individual asset classes will continue to demonstrate similar characteristics for both volatility and total return over time, and make decisions accordingly.

Extremes are Everywhere

Look at the green box which represents emerging market stocks.  This index represents countries with economic systems which would be considered primitive to what we have here in the US.   In the fifteen years shown, this index has either been one the two best or two worst performing asset classes eleven times.

Long Term Bonds also demonstrate extreme volatility.  When most people think of bonds, they don’t imagine those investments moving to those extremes.

Volatility and Compounded Returns

Some asset classes move in more extreme ways than others.  US Stocks are a prime example of a volatile asset class.  The past fifteen years show returns all over the place, including a really ugly year (2008).   Short term bonds are the Opposite.  This asset class generated positive returns in every year shown.

Now look at the compounded returns.  Short-Term Bonds, while positive in each period, have either the worst or second worst compounded return.  Compare that to the three categories of US Stocks.


Gold was all the rage following the housing bust in 2008. From 2009 through 2012 gold prices increased for four straight years.  Remember the commercials touting how “now was the time to buy gold.”  The five years afterwards proved the exact opposite.

(Just remember this lesson as you continue to hear about things like Bitcoin)

Lack of Predictive Properties

Returns occur somewhat randomly.  We make no predictions about what will happen next year or over the next fifteen years.  Certainly any of these returns shown are not guaranteed.  This information is meant to inform and educate.  We believe it is a useful tool to show you what can happen, both good and bad.  History, some say, often rhymes, but it rarely repeats.  Performance for these eleven assets will either be better or worse than what is shown, and it will almost certainly be different.  Just don’t be surprised if there are some interesting similarities as we march through time.