Updating the Asset Allocation Quilt for 2018

Some years stocks go up.  And every now and then stocks go down.  And  one of the best ways we have found to help visualize how various types of investments behave is by using the asset allocation quilt.  Each major asset class is assigned a color, and each year, the performance is ranked best to worst.  More importantly, the compounded long-term returns are also shown ranked best to worst.

In today’s video we’ll recap the investment world, and share our observations of our favorite performance chart, the Asset Allocation Quilt.

To watch this on our YouTube Channel click here.  (You can also see our past videos and some other planning related content).


Download a Copy of This Year’s Quilt

To download a copy of the chart, please click the button below.

What do you see?

Here are some of our observations:

One of our biggest take-away’s is how the more volatile asset classes generate more long-term return than their much calmer counterparts.  The only asset class to not lose money in the past 16 years? Short-Term Bonds.  The lowest long-term performance? Also Short-term Bonds.When you review your accounts and see declining account values, we lose sight of the longer-term facts.

Most client portfolios own most of these asset classes.  We are believers in both Small-Cap and Mid-Cap stocks and use them as part of the stock holdings in most accounts.  And years like 2018, those smaller companies will drag down overall returns.

2018 was one of those rare years, when nothing worked well.  Only two of the eleven asset classes posted a very slight increase.  Years like this frustrate us.

Gold is always an interesting topic.  People ask us about using gold as a defensive.  It does tend to “zig” when stocks “zag.”  But, many people fail to understand it has also been extremely volatile over time.

The biggest surprise: Real Estate.  Over longer periods of time real estate has been a strong performer.  It does have some volatility.

We’d be interested to hear your observations.


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