The Morningstar Asset Class Gameboard has just been updated for the 2017 financial year. It’s always fascinating to look back over several years and see the winners and losers, and confirm just how tough it is to pick the best asset class in advance.
If you can pick up a predictable pattern from that lot, you are doing better than me.
One observation is that one year’s winner inevitably finds itself at the bottom not long after. And vice versa.
My tip. Throw away your crystal ball and focus on what you can control instead.
Make the starting point you and your own needs, not what someone is trying to sell you. Build a diversified portfolio that suits your own risk appetite and goals. Only take risks that generate an expected return and reduce the risks that do not. Take a long-term view. Pay heed to costs and taxes. And once you’re set, manage your emotions and stay disciplined.
The full report is available here which also includes one-year returns for each of the past five calendar years, plus standard deviations (volatility) of returns in each asset class. The latter ‘risk’ measure is often overlooked by investors who consider their portfolios only in terms of returns.
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