Vanguard's Economic and Market Overview
Market leadership changes
10-year
Emerging markets equities appears at
both the top and bottom multiple times,
illustrating the relatively high volatility
of single asset classes
The balanced composite generally falls
near the middle, demonstrating the volatility
dampening effect of high-grade fixed
income and the consistency resulting
from holding a broadly diversified portfolio
Lrg REIT Val
13.2 2.5 18.4
2012 2013 2014 2015 2016 2017 2018
Emg Sml REIT Grw Sml Emg IB
18.1 38.8 30.4 5.1 21.3 31.1 3.2
REIT Grw
Grw T-Bill Lrg
17.8 34.2
29.6 1.9 31.4
2019 2020
2021 Average
Grw Grw REIT
35.8 38.3 43.1
Lrg
Cmd Lrg
21.0 27.1 16.5
Grw
19.4
Value oriented U.S. based stocks
Val
(Russell 3000 Value Index)
Growth oriented U.S. based stocks
Grw
(Russell 3000 Growth Index)
Val Lrg
17.5 33.1
Val
12.7
IB
1.4
HY
17.1 26.3
Dev Bnd Val Sml Lrg
0.0 26.3 20.0 26.5
Sml
Lrg
Large U.S. based stocks
13.2
(Russell 1000 Index)
Dev Val Grw Lrg
17.4 32.7 12.4 0.9
Lrg Lrg
HY
12.1 21.7 -2.1
REIT Emg Grw
25.8 15.5 25.8
Val
12.9
Small U.S. based stocks
Sml
Lrg
Dev
16.4 20.5
IB
8.8
Bnd
0.5
Sml
Bal
Bal
16.4
16.8
6.4
Cmd Bal Grw
11.4 16.5 -2.1
T-Bill Emg Sml REIT Dev
0.0 10.3 14.6 -4.6 22.3
Sml
25.5
Bal
13.4 25.4
Val
REIT
Dev
11.3
(Russell 2000 Index)
International stocks from developed countries
(FTSE Developed All Cap ex US Index)
Dev Sml
10.0 14.8
Bal
International stocks from emerging countries
Emg
9.7
(FTSE Emerging ACap CN A Includes Index)
U.S. stock returns exceeded non-U.S.
stock returns by a significant amount over
HY
HY
Bnd
Bal REIT Val
Lrg
Bal
Bnd Bal
Dev
Bnd
15.8
7.4
6.0
-0.6
8.6
13.2
-4.8
20.7
7.5
12.0
8.3
the past ten years, yet it's important to
remember that recent outperformance by
a sub-asset class or market segment does
not imply future outperformance
Grw
HF
Sml
Dev Grw
HY
Bal
Emg
HY
Dev
HY
HY
High-yield U.S. bonds
15.2
6.7
4.9
-1.8
7.4
7.5
-5.5
20.4
7.1
11.6
6.8
Bal
REIT
Emg
HF
Bal
HF
HF
HY
HF
HY
Emg
Investment-grade U.S. bonds
(Bloomberg US Aggregate Bond Index)
(Bloomberg US Corp High Yield Index)
Investment-grade international bonds
IB
12.7
2.5
2.6
-3.6
7.3
6.0
-6.7
14.3 6.8
5.3
(Bloomberg GA ex-USD Index Hedged)
5.8
IB
IB
HY
Val
IB
REIT
Val
Bnd
IB
HF
IB
T-Bill
Short-term Treasury rates
(Citigroup 3-Month US T-Bill Index)
6.5
1.2
2.5
-4.1
4.9
5.1
-8.6 8.7
3.9
3.7
3.8
Bnd T-Bill T-Bill
Sml
Dev
Bnd
Sml
HF
Val
Emg
Bnd
REIT
U.S. public equity real estate (REIT)
(MSCI US REIT Index)
4.2
0.1
0.0
-4.4
3.1
3.5 -11.0 8.6
2.9
1.5
2.9
Commodities
HF
Bnd
HF
HY
Bnd
3.5
-2.0
-0.6
-4.5
2.6
Cmd IB
-13.0 7.6
Source: Vanguard. Last observation: December 31, 2021;
10-year average performance from December 31, 2011
through December 31, 2021.
Source: Hedge Fund Research, Inc.
T-Bill
0.1
Cmd
-1.1
Emg
Dev
-3.2 -4.4
Emg HF
-13.5 2.5
Cmd Cmd Cmd T-Bill Cmd
-9.6 -17.0 -24.7 0.3 0.7 -14.8 2.3
IB
2.5
T-Bill Emg Cmd Cmd
0.8 -14.8 5.4 -3.5
Dev T-Bill REIT Bnd
-7.6 -1.5
T-Bill T-Bill
HF
Cmd
(Bloomberg Commodity Index)
0.6
0.0
2.6
Hedge funds
IB
-1.4
T-Bill
HF
0.6
Cmd
-3.4
Bal
(HFRX Global Hedge Fund Index*)
Balanced Static Composite (39% U.S. stocks**,
26% Int'l stocks+, 24.5% Invest-grade U.S. bonds++,
10.5% Invest-grade Int'l bonds++)
**
U.S. stocks: MSCI U.S. Broad Market Index.
† International Stocks: FTSE Global All Cap ex-US Index.
tt Bonds: Bloomberg US Aggregate Bond Index and Bloomberg Global Aggregate ex-USD Index Hedged.
Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.
For institutional use only. Not for distribution to retail investors.
V 14
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