2020 Illustrated Market Review
An illustrated world review of selected capital market results in 2020.
Market Summary
Index Returns
Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Market segment (index representation) as follows: US Stock Market (Russell 3000 Index), International Developed Stocks (MSCI World ex USA Index [net div.]), Emerging Markets (MSCI Emerging Markets Index [net div.]), Global Real Estate (S&P Global REIT Index [net div.]), US Bond Market (Bloomberg Barclays US Aggregate Bond Index), and Global Bond Market ex US (Bloomberg Barclays Global Aggregate ex-USD Bond Index [hedged to USD]). S&P data © 2021 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. MSCI data © MSCI 2021, all rights reserved. Bloomberg Barclays data provided by Bloomberg.
World Asset Classes
2020 Index Returns (%)
Equity markets around the globe posted positive returns in 2020. Looking at broad market indices, US equities outperformed emerging and non-US developed markets.
Value underperformed growth across regions. Small caps outperformed large caps in non-US developed and emerging markets but underperformed in the US.
REIT indices underperformed equity market indices in both the US and non-US developed markets
Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. MSCI data © MSCI 2021, all rights reserved. Dow Jones and S&P data © 2021 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Bloomberg Barclays data provided by Bloomberg. Treasury bills © Stocks, Bonds, Bills, and Inflation Yearbook™, Ibbotson Associates, Chicago (annually updated work by Roger G. Ibbotson and Rex A. Sinquefield).
US Stocks
2020 INDEX RETURNS
The US equity market posted positive returns for the year and outperformed emerging and non-US developed markets.
Value underperformed growth across large and small cap stocks.
Small caps underperformed large caps.
REIT indices underperformed equity market indices.
Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Market segment (index representation) as follows: Marketwide (Russell 3000 Index), Large Cap (Russell 1000 Index), Large Cap Value (Russell 1000 Value Index), Large Cap Growth (Russell 1000 Growth Index), Small Cap (Russell 2000 Index), Small Cap Value (Russell 2000 Value Index), and Small Cap Growth (Russell 2000 Growth Index). World Market Cap represented by Russell 3000 Index, MSCI World ex USA IMI Index, and MSCI Emerging Markets IMI Index. Russell 3000 Index is used as the proxy for the US market. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. MSCI data © MSCI 2021, all rights reserved.
International Developed Stocks
2020 INDEX RETURNS
Developed markets outside the US posted positive returns for the year but underperformed emerging markets and US equities.
Value underperformed growth.
Small caps outperformed large caps.
Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Market segment (index representation) as follows: Large Cap (MSCI World ex USA Index), Small Cap (MSCI World ex USA Small Cap Index), Value (MSCI World ex USA Value Index), and Growth (MSCI World ex USA Growth). All index returns are net of withholding tax on dividends. World Market Cap represented by Russell 3000 Index, MSCI World ex USA IMI Index, and MSCI Emerging Markets IMI Index. MSCI World ex USA IMI Index is used as the proxy for the International Developed market. MSCI data © MSCI 2021, all rights reserved.
Emerging Markets Stocks
2020 INDEX RETURNS
Emerging markets posted positive returns for the year, outperforming developed ex US equity markets but underperforming US equities.
Value underperformed growth.
Small caps outperformed large caps.
Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Market segment (index representation) as follows: Large Cap (MSCI Emerging Markets Index), Small Cap (MSCI Emerging Markets Small Cap Index), Value (MSCI Emerging Markets Value Index), and Growth (MSCI Emerging Markets Growth Index). All index returns are net of withholding tax on dividends. World Market Cap represented by Russell 3000 Index, MSCI World ex USA IMI Index, and MSCI Emerging Markets IMI Index. MSCI Emerging Markets IMI Index used as the proxy for the emerging market portion of the market. MSCI data © MSCI 2021, all rights reserved.
Select Market Results
2020 INDEX RETURNS
In US dollar terms, Denmark and Sweden recorded the highest country results in developed markets, while the UK and Singapore posted the lowest returns for the year. In emerging markets, Korea and Taiwan recorded the highest country results, while Egypt and Brazil posted the lowest results.
Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Country performance based on respective indices in the MSCI World ex US IMI Index (for developed markets), MSCI USA IMI Index (for US), and MSCI Emerging Markets IMI Index. All returns in USD and net of withholding tax on dividends. MSCI data © MSCI 2021, all rights reserved. UAE and Qatar have been reclassified as emerging markets by MSCI, effective May 2014.
Select Currency Results vs. US Dollar
2020
In developed markets, all currencies appreciated versus the US dollar. In emerging markets, currency results versus the US dollar was mixed. Most currencies generally depreciated versus the US dollar, but some, notably the Taiwan dollar and Chinese renminbi, appreciated.
Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. MSCI data © MSCI 2021, all rights reserved.
Real Estate Investment Trusts (REITs)
2020 INDEX RETURNS
US real estate investment trusts underperformed non-US REITs during the year.
Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Number of REIT stocks and total value based on the two indices. All index returns are net of withholding tax on dividends. Total value of REIT stocks represented by Dow Jones US Select REIT Index and the S&P Global ex US REIT Index. Dow Jones US Select REIT Index used as proxy for the US market, and S&P Global ex US REIT Index used as proxy for the World ex US market. Dow Jones and S&P data © 2021 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved.
Commodities
2020 INDEX RETURNS
The Bloomberg Commodity Index Total Return declined 3.12% in 2020.
Silver and soybean meal were the best performers, returning 41.92% and 31.79%, respectively.
WTI crude oil and low sulfur gas oil were the worst performers, declining 50.90% and 42.49%, respectively.
Past performance is not a guarantee of future results. Index is not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. All index returns are net of withholding tax on dividends. Securities and commodities data provided by Bloomberg.
Fixed Income
2020 INDEX RETURNS
Interest rates declined in the US Treasury fixed income market in 2020. The yield on the 5-Year US Treasury note decreased 133 basis points (bps), ending at 0.39%. The yield on the 10-Year US Treasury note declined 98 bps to 0.93%. The 30-Year US Treasury bond yield decreased 72 bps to finish at 1.64%.
On the short end of the yield curve, the 1-Month US Treasury bill yield decreased 140 bps to end at 0.08%, while the 1-Year US Treasury bill yield declined 151 bps to 0.13%. The 2-Year US Treasury note finished at 0.09%, a decrease of 149 bps.
In terms of total returns, short-term corporate bonds gained 5.41%. Intermediate-term corporate bonds returned 7.47%.
The total return for short-term municipal bonds was 3.15%, while intermediate-term municipal bonds returned 5.18%. Revenue bonds outperformed general obligation bonds for the year.
One basis point (bps) equals 0.01%. Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Yield curve data from Federal Reserve. State and local bonds are from the S&P National AMT-Free Municipal Bond Index. AAA-AA Corporates represent the ICE BofA US Corporates, AA-AAA rated. A-BBB Corporates represent the ICE BofA US Corporates, BBB-A rated. Bloomberg Barclays data provided by Bloomberg. US long-term bonds, bills, inflation, and fixed income factor data © Stocks, Bonds, Bills, and Inflation (SBBI) Yearbook™, Ibbotson Associates, Chicago (annually updated work by Roger G. Ibbotson and Rex A. Sinquefield). FTSE fixed income indices © 2021 FTSE Fixed Income LLC, all rights reserved. ICE BofA index data © 2021 ICE Data Indices, LLC. S&P data © 2021 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved.
Global Fixed Income
2020 Yield Curves
Changes in government bond interest rates in the global developed markets were mixed for the year.
Longer-term bonds generally outperformed shorter-term bonds in global ex-US developed markets.
Short- and intermediate-term nominal interest rates were negative in Japan, while all maturities finished in negative territory in Germany.
One basis point (bps) equals 0.01%. Source: ICE BofA government yield. ICE BofA index data © 2021 ICE Data Indices, LLC.
Impact of Diversification
2020 INDEX RETURNS
These portfolios illustrate the results of different global stock/bond mixes and highlight the benefits of diversification. Mixes with larger allocations to stocks are considered riskier but have higher expected returns over time.
1.STDEV (standard deviation) is a measure of the variation or dispersion of a set of data points. Standard deviations are often used to quantify the historical return volatility of a security or portfolio.
Diversification does not eliminate the risk of market loss. Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect expenses associated with the management of an actual portfolio. Asset allocations and the hypothetical index portfolio returns are for illustrative purposes only and do not represent actual performance. Global Stocks represented by MSCI All Country World Index (gross div.) and Treasury Bills represented by US One-Month Treasury Bills. Globally diversified allocations rebalanced monthly, no withdrawals. Data © MSCI 2021, all rights reserved. Treasury bills © Stocks, Bonds, Bills, and Inflation Yearbook™, Ibbotson Associates, Chicago (annually updated work by Roger G. Ibbotson and Rex A. Sinquefield).