ASSET CLASS RETURNS

An asset class is a category of investments which share common  physical & legal characteristics whose prices tend to move together over time.  The far left hand column in the Table  below lists 12 asset classes used by many investors in this area.  In the 2nd column from the left we list an index for each asset class.

An index is a list of individual investments that is used to measure the performance of an asset class.  An index may include individual stocks, bonds, buildings, or fixed amounts of various commodities.  An index provides a quick summary look at a particular market so the investing public can see how it is performing. They also serve as a benchmark for measuring the performance of a money manager.

Five columns show the annual returns for the indexes over different time periods ending in December 2007. Notice that in many cases the returns over the past five years are very different from the returns over the life of the index.  Standard deviation measures the volatility of the annual returns.  Higher numbers indicate a wider range of returns.