One of the biggest questions that investors have is which asset class or groups of investment classes have performed the finest. Most often, the most excellent performing investments involve a fairly high degree of risk as well as sophistication, such as hedge funds that required minimum investments and lock-out periods, thereby putting them out of the reach of most investors.
So for regular retail investors, learning about the paramount investment areas is even more important. Also up until recently, a lot of investors have seen bonds and emerging markets as the key over-performers available to them, level though bonds are facing pressure thanks to extremely low interest rates as well as emerging markets face risks given how slow the rest of the world has been to recover from this global economic slowdown. But are bonds as well as emerging markets the best places to invest when looking at both short as well as long term data?
Surprisingly, the answer is no. When looking at the paramount spot to invest in mutual funds, according to data assembled by Morningstar, the top spot to invest on a YTD basis has been Precious Metals equity funds, which have seen a YTD return of over 30%. Plus as meant for the long-term, these types of investments have proved a 22.4% rate of return for the past five years. Quite impressive, no question.
In comparison, the finest returns from bonds in the short-term have come from Long Term Government bonds with a YTD return of 17.4%. The top 5-year rate of return has come Emerging Markets bonds with a return of 8.6%.
And on the Emerging Markets front, the paramount YTD region has been Morningstar's Pacific/Asia Ex Japan with a return of 19.one%. The most excellent 5-year performer is Latin American Stock with a return of 20.9%. Both have negative 3-year rates of return, compared to the Precious Metals group which has a return of 9.4%
Today, it is and worth noting that precious metals have enjoyed tremendous growth in the past a number of years. Although their returns are attractive, they perform correspond with the record-setting price of gold, silver, copper also other metals. Not coincidentally, these price increases also correspond to a US dollar that has lost value, suggesting that an improvement to the price of the dollar could hurt precious metals.
Regardless, investors who are looking at historic returns as a form to sift through their investment options should reflect on that future returns are never predicted by looking at past returns. Nobody can drive forward by looking in the rear-view mirror, appropriate? So if a precious metals investment is one that makes sense for your portfolio, make sure to speak with an accredited financial professional who will help you be trained the risks associated with such a specialty group.
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