Periodic table of annual returns
 | A periodic table is the best way to visualize the importance of diversification, reversion-to-the-mean, and the impossibility of forecasting asset-class returns. |
From year to year, there’s no telling which asset classes will be the best performers in the following years, which is a strong argument for portfolio diversification.[1] The periodic table of annual returns, patterned after Mendeleev's periodic table of the elements, shows this concept graphically.
Periodic table
Refer to the table below. This table represents the annual total returns (income plus price changes) in terms of Canadian dollars for a variety of asset classes over the past ten years. The foreign asset class returns are adjusted for year-end to year-end foreign exchange fluctuations to put them in Canadian dollar terms.
|
Asset classes represented
The following table provides a legend for terms represented above, including links to the underlying index provider (if available).
| Text | Represents |
|---|---|
| RRB | Real return bonds |
| S&P500 | S&P 500® - S&P Dow Jones Indices |
| L. Bond | Canada Long Term Bond Index - FTSE TMX Canada Indices |
| S. Bond | Canada Short Term Bond Index - FTSE TMX Canada Indices |
| TSX | S&P/TSX Composite (CAD) - S&P Dow Jones Indices |
| Wilshire | Wilshire 5000 Total Market Index - Wilshire Associates |
| All Bond | Canada Universe Bond Index - FTSE TMX Canada Indices |
| US Bond | Barclays US Aggregate Bond Index |
| Gold | Gold bullion |
| Emerging | MSCI Emerging Markets Indexes |
| EAFE | MSCI EAFE Index - Developed Markets |
| T-Bill | 3 month Treasury Bills (T-Bill) |
Interpreting the table
At a glance, one can see how the returns vary from year-to-year. For example, the Wilshire 5000 Total Market Index measures performance of all U.S. equity securities with readily available price data. Canadians may be more familiar with the S&P 500, also shown in the table.
Starting at the left side, take a look at how a couple of asset classes performed, represented by the Wilshire 5000 and the S&P/TSX Composite.
| Year | Wilshire 5000 | S&P/TSX Composite |
|---|---|---|
| 2012 | 3 | 5 |
| 2013 | 1 | 4 |
| 2014 | 2 | 6 |
| 2015 | 3 | 12 |
| 2016 | 2 | 1 |
| 2017 | 4 | 5 |
| 2018 | 4 | 12 |
| 2019 | 2 | 3 |
| 2020 | 2 | 9 |
| 2021 | 3 | 2 |
| 2022 | 9 | 4 |
This unpredictability demonstrates the variation of year-to-year investor returns. Holding a diversified portfolio (one which contains several asset classes) will help minimize the variation.
See also
References
- ^ The Importance of Diversification
- ^ Based on data from Libra Investment Management, which is Copyright © Libra Investment Management Inc. 2005-2023. All rights reserved.
Further reading
- Financial Wisdom Forum topic: "Stock/Bond/Index/Fundamental/Asset Class/Quotes - Sources" Sources used for this wiki article.
- Financial Wisdom Forum topic: "Periodic Tables and Charts of Annual Investment Returns"
- Financial Wisdom Forum topic: "Investment Performance Spreadsheet"
External links
- Stingy Investor: Periodic Table of Annual Returns for Canadians
- Callan periodic table of investment returns, Bogleheads wiki
- Canadian Periodic Table of Total-returns.xls, source file for the periodic table, MS Excel. The conditional formatting used to create the table colours is not visible from within Google Sheets. Download the file directly to view the table colours.
- Periodic Tables, by Callan Associates Inc. (registration required)
- A Returns Spreadsheet for Bogleheads - Bogleheads.org, discussion of a returns spreadsheet that is generic and can be used by Canadian investors.
- Calculating personal returns - Bogleheads.org, the wiki page (and download) for the returns spreadsheet.