The data below, which shows the growth of $1.00 in various asset classes (listed from least risky to most risky), reinforces rather dramatically the fact that the best returns in the stock market do indeed come from owning the riskier parts of the market. Using this type of data to determine the proper mix of risk and return for each investor’s portfolio is one of the most important things we do at Plancorp.
Growth of $1.00 (1927-2010)
| Asset Class | Avg. Return | $ Value |
| One-Month US Treasury BillsLong Term Corporate BondsUS Small Cap Growth Index
US Large Cap Growth Index Total US Stock Market Index Standard & Poor’s 500 Index US Large Cap Value Index US Small Cap Index US Targeted Value Index (mid/small cap) US Small Cap Value Index |
3.7%5.8%8.7%
9.0% 9.7% 9.8% 10.3% 11.8% 13.0% 13.6% |
$20$116$1,031
$1,230 $2,188 $2,540 $3,518 $10,134 $22,647 $39,299 |
Note the returns of the Small, Value and Small Value asset classes relative to the returns of the other asset classes.
Data provided by the following sources: Ibbotson Associates, Fama/French, S&P Index Services Group, Dimensional Fund Advisors.
One-Month US Treasury Bills
©Stocks, Bonds, Bills, and Inflation Yearbook™, Ibbotson Associates, Chicago (annually updated work by Roger G. Ibbotson and Rex A. Sinquefield). Used with permission. All rights reserved.
Long-Term Corporate Bonds
©Stocks, Bonds, Bills, and Inflation Yearbook™, Ibbotson Associates, Chicago (annually updated work by Roger G. Ibbotson and Rex A. Sinquefield). Includes US corporate bonds with an average maturity of twenty years. Used with permission. All rights reserved.
US Small Cap Growth Index
Fama/French US Small Growth Index provided by Fama/French from CRSP securities data. Includes the lower-half range in market cap and the lower 30% in book-to-market of NYSE securities (plus NYSE Amex equivalents since July 1962 and Nasdaq equivalents since 1973), excluding utilities.
US Large Cap Growth Index
Fama/French US Large Growth Index provided by Fama/French from CRSP securities data. Includes the upper-half range in market cap and the lower 30% in book-to-market of NYSE securities (plus NYSE Amex equivalents since July 1962 and Nasdaq equivalents since 1973), excluding utilities.
US Total Stock Market Index
Fama/French Total US Market Index provided by Fama/French from CRSP data. Includes all NYSE securities (plus NYSE Amex equivalents since July 1962 and Nasdaq equivalents since 1973), including utilities.
S&P 500 Index
Provided by Standard & Poor’s Index Services Group. “Standard & Poor’s®,” “S&P®,” “S&P 500®,” “Standard & Poor’s 500®,” and “500” are trademarks of the McGraw-Hill Companies, Inc. and have been licensed for use by Dimensional Fund Advisors.
US Large Cap Value Index
Fama/French US Large Value Index provided by Fama/French from CRSP securities data. Includes the upper-half range in market cap and the upper 30% in book-to-market of NYSE securities (plus NYSE Amex equivalents since July 1962 and Nasdaq equivalents since 1973), excluding utilities.
US Small Cap Index
Fama/French US Small Cap Index provided by Fama/French from CRSP securities data. Includes the lower-half range in market cap of NYSE securities (plus NYSE Amex equivalents since July 1962 and Nasdaq equivalents since 1973).
US Targeted Value Index
Dimensional US Targeted Value Index is a market-capitalization-weighted index of securities of small and mid cap value companies. These are defined as companies whose market capitalization falls below that of the 500th (for mid) or 1,000th (for small) largest company in the Eligible Market, and whose book-to-market ratio falls in the top 25% (for mid) or 50% (for small) of the market capitalization of the size range after the exclusion of utilities, companies lacking financial data, and companies with negative book-to-market ratio. The Eligible Market is composed of securities of US companies traded on the NYSE, AMEX, and Nasdaq Global Market, excluding non-US companies, REITs, UITs, and investment companies.
US Small Cap Value Index
Fama/French US Small Value Index provided by Fama/French from CRSP securities data. Includes the lower-half range in market cap and the upper 30% in book-to-market of NYSE securities (plus NYSE Amex equivalents since July 1962 and Nasdaq equivalents since 1973), excluding utilities.
Disclosure:
This material has been prepared for informational purposes only and should not be used as investment, tax, legal or accounting advice. All investing involves risk. Past performance is no guarantee of future results. Diversification does not ensure a profit or guarantee against a loss. You should consult your own tax, legal and accounting advisors.
