At the end of the first quarter I noted that US Equities were really the only asset class doing well. That trend has not only continued through the second quarter, it’s actually become more severe.
Judging by Morningstar’s asset class indices, there aren’t any other asset classes that come close to the performance of US equities year to date. In fact, in the second quarter, US equities were the only asset class that were positive. Fixed income, international equities, emerging market equities and commodities were all negative in the second quarter–some segments by a lot. And painfully, assets that were supposed to be safe are down the most. Long term Treasuries are down 7% year to date and Gold is now down 28%!
As I mentioned last quarter, this is going to make things particularly difficult for financial advisors who usually systematically diversify by asset class. Most clients have been reading headlines that stocks are hitting all time highs and may have a difficult time understanding why they’re not keeping pace–especially if they were put into the wrong “safe” asset classes.
**Shameless plug**: 2013 should help drive home the point that there’s no such thing as passive investing. Two different advisors will make two different investment decisions with your money. Risk is not static, and so it’s important to have your savings managed by a skilled investor who understands securities markets and spends the majority of his/her time researching investments.