The Dark Side of the Moon Asset Class Scoreboard

It’s a new year and new returns for our asset class scoreboard, where the investment classes returns are put to the test to see how they do from the beginning to the end of each year. It seems as though the “Bulls” in the final 2013 scoreboard, have warped into the dogs of January, and vice versa.

Updated Asset Class Scoreboard(Disclaimer: past performance is not necessarily indicative of future results)
(Disclaimer: For source data look at chart below)

Maybe it’s just the die-hard Pink Floyd fans that we are, but we can’t help but think that January’s chart looks a little bit like the Dark Side of the Moon cover…

Dark Side of the MoonJanuary Asset Class Scoreboard(Disclaimer: past performance is not necessarily indicative of future results.)
Source: All ETF performance data from Morningstar.com
Sources: Managed Futures = Newedge CTA Index, Cash = 13 week T-Bill rate,
Bonds = Vanguard Total Bond Market ETF (BND),
Hedge Funds= IQ Hedge Multi-Strategy Tracker ETF (QAI)
Commodities = iShares GSCI ETF (GSG); Real Estate = iShares DJ Real Estate ETF (IYR);
World Stocks = iShares MSCI ACWI ex US Index Fund ETF (ACWX);
US Stocks = SPDR S&P 500 ETF (SPY)

There’s something about the Dark Side of the Moon album cover that resonates with us as finance nerds… as strange as it sounds. You see, just as the prism releases its rainbow colors (investments) into existence…  those colors (investments) are on a never ending trajectory.  Lights never have a stopping point, and neither do investments (unless of course they shut down). For the sake of this chart, it’s as if there’s a new color prism at the start of each year. Each investment class gets a clean slate no matter if posting a +30% or -7% returns the year prior. The phrase “past performance is not necessarily indicative of future results” couldn’t be more appropriate. 

The problem is it doesn’t work that way.  Investors are very aware that Stocks posted a +30% return in 2013, despite its most recent monthly negative performance; just like investors are aware of Managed futures recent struggle, despite the fact that past performance is in fact not necessarily indicative of future results. But it’s not uncommon for one years Bulls to quickly turn into the Dogs of the next. Stocks and World Stocks went from the top two investments, to the bottom two, with Bonds showing the first sign of life in quite some time {past performance is not necessarily indicative of future results}. You’re probably thinking, that’s the whole point of asset allocation, right (sarcasm)? Pick the best or worst performers of the year prior )even more sarcasm)? That’s why the finance community emphasizes so much attention on yearly returns right? Not Quite.

This is a very near sided view. It’s about where the light (investment) was 20-30 years ago, and where it will be 20-30 years from now.  Filing down returns to just 12 months can greatly modify how well an asset class is really performing. Adjusting an asset classes yearly returns by just a couple of days could greatly alter where these investments would finish on the scoreboard. Imagine how it would look if you alter it by 6 months?

P.S. — We’ve heard some people question why Managed Futures isn’t showing crisis period performance with Stocks experiencing volatility. The simple answer is negative correlation does not equal non-correlation, and we provide a deeper explanation here.

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Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.