Asset Allocation

Mebane  Farber takes a look at asset allocation looking at a broad base of ETFs.  My calculations show that an equal calculation to each would have produced about a 6.20% return last year.   US stocks obviously shot the lights out in 2013.  Almost everything else though had a decidedly mixed return.  

It is tempting to think that in a year when stocks rocketed to the moon that everything should have been in that asset.  However, I'd note that nobody thought last year that US stocks would do anywhere near this well. The reason most investors should have an asset allocation strategy is outlined in the chart of asset classes below.

Hard to know which asset class broadly speaking will be the best year over year.  Note that a diversified portfolio as comprised by JP Morgan for this chart had returns nearly identical as the S&P 500 but theoretically did so with less risk.  

Links:  Mebfaber.com:  Market Outlook 2014.

Asset class returns charts come to us from JP Morgan's 1st. Quarter 2014 guide to the markets.