The great divergence in performance among the major asset classes in 2013 rolls on. US REITs and US equities continue to lead the charge on the upside, pulling further away from the laggards, which are headed on the downside by commodities overall and foreign developed-market government bonds in US dollar terms. The wide array of returns so far this year is dramatic, but it's not all that different from when we profiled this horse race a month ago. The main revision is that the hefty gains for US REITs and US stocks are even bigger.
Here's how the numbers stack up according to a set of ETF proxies for this
By Alison Martier and Seth J. Masters
US defined contribution (DC) plan sponsors large and small are seeking ways to help plan participants achieve better outcomes. Over the last 30 years, compelling evidence has accumulated that suggests currency-hedged global bonds may be an important part of the solution.
We believe that DC plans should globalize some or all of their fixed-income assets. We’ve recently co-authored a white paper explaining our research. It illustrates the superior risk/return profile of hedged global bonds over US bonds, among other advantages.
Our paper also identifies how much of an allocation to global bonds is appropriate and outlines ways in which plans can globalize with minimal disruption to participants.
More Opportunity to Add Value
The most obvious potential benefit to globalizing comes from a significantly increased opportunity set. As of year-end 2012, the Barclays US Aggregate Bond Index represented $15 trillion in outstanding debt
By Samuel Lee
It's a law of nature that bad things happen more often than not. The possible outcomes that humans consider desirable are a sliver of all possible outcomes. It's why genetic mutations usually hurt or kill offspring born with them, why throwing a wrench into a finely turned engine will almost never make it run better, and why stock prices are more prone to sudden collapses than sudden rises.
Consider human history. For all but a fragment of it, about half of all children died before their fifth birthdays. Of the ones who survived, life was nasty, brutish, and short. According to data compiled by economist Angus Maddison, the total world population grew at an annualized rate indistinguishable from zero over the period from A.D. 1 to A.D. 1820. Per capita output grew even slower, if at all. While the data is necessarily sparse and uncertain, the