Benchmark Annualized Market Returns 2017
Investment Annuity presents 2016's market returns for stocks, bonds, Real Estate, and International markets
The Data
We’ve taken a look at market return totals for the last year, and we want to share them here today. We wanted to make this information available to our long-term annuity investors, as our work with Investment Only Variable Annuities is all about investing in market-based investments. This is a large amount of data, so we’re hoping you’ll refer to it for your view of last year’s market information throughout the year.
This isn’t going to be like other articles we write here on the Investment Annuity- it’s not about Variable Annuities, Portland, Oregon, Real Estate, 1035 exchanges, etc. We don’t want to add too much of our own commentary here, because we don’t want to give the impression we’re passively endorsing any of these assets in particular or giving some form of investment advice- we’re not, we’re just reporting raw market return information.
We’ve looked to Mornistar.com, Bloomberg, the St. Louis Federal Reserve, and the Institute of Business & Finance’s annual Benchmark Returns reports for this data.
The Numbers
Without further ado, we present the annualized market return data of key market sectors for 2016 with a minimum of commentary. We’ve included both this year’s returns and average returns for the sector. For Equities (stocks) we’ve included the average Price to Earning (P/E) Ratio for the benchmark as tabulated by the Institute of Business & Finance. For Fixed Income (bonds) we’ve included average duration of the relevant sector as well.
US Major Stock Market Indexes
S&P Total U.S. Stock Market
U.S. Growth Stocks
U.S. Value Stocks
Russell 3000
S&P 500
S&P Small Cap
Real Estate
Real Estate is a market sector that offers investors many methods of investing. Tax impacts of investing in the individual Real Estate markets can be complicated, and for many, putting away money for the Real Estate sector in a deferred vehicle such as Investment Only Variable Annuity (IOVA), and IRA, etc., is a tax-smart option. It is easy for broader market investors to access Real Estate these days via Real Estate Investment Trust (REIT) stocks, mutual funds, etc.
For this report, we present market return data for 3 different market sectors with marketable (traded on an exchange like the NYSE) Real Estate securities: Residential, Broad Market REIT, and Mortgage Real Estate.
Real Estate
Residential Real Estate
Mortgage Real Estate
Fixed Income
For our look at Fixed Income (bond) markets in 2016, we’ve included the effective duration as calculated by the Institute of Business & Finance additional to market return data. This is a measure used by bond investors to look at volatility of a bond as well as a measurement of how long until a bond is paid off (it isn’t the same thing as maturity– when a bond’s principal is paid back to the investor).
We look at 8 different bond indexes with different issuers (Corporate, Government, etc), maturities, and quality in this report. There are many bond indexes, so we’ve had to limit ourselves to indexes relevant to our investors (that is long-term Variable Annuity investors).
iBoxx Investment Corporate Index
3-7 Year U.S. Treasuries
10-20 Year U.S. Treasuries
20+ Year U.S. Treasuries
Treasury Inflation Protected Securities (TIPS)
Mortgage Backed Bonds
iBoxx High Yield Bonds
A-Rated Corporate Bonds
International Stock Market Indexes
MSCI All World ex-U.S. Stocks
EAFE Large & Midcap Stocks
EAFE Small Cap Stocks
Emerging Market Stocks
Thank you for taking the time to read over our market return report. Let us know if there’s any data that you’d like to see for next time that you didn’t see this time. This is an annual update, so we’ll be back to regular Oregon oriented economic blog posts next week.
Meet the Author & Portfolio Manager
Victor Schramm is a Certified Fund Specialist (CFS®), with expertise in Mutual Funds & Variable Annuity Separate Accounts. He focuses on long term investing geared toward our annuity clients as a Fee Only Investment Advisor. He lives in Portland, OR.
Victor Schramm, CFS®Analyst & Portfolio Manager
Disclaimer
This information is solely a representation of publicly available facts intended for educational use only. This is not a solicitation to buy or sell any public or private Security, in any city named in the article or elsewhere. Benchmark Market Return data is not to be used as a timing tool to time purchases or sales of marketable securities- these numbers are for use as comparison tools only. As always, past performance does not guarantee future performance. All data from Morningstar, Bloomberg.com, and the Institute of Business & Finance.