Major Asset Classes | December 2020 | Performance Review

The year just passed left deep scars on humanity and the global economy, but there were few signs of trouble in the 2020 returns for the major asset classes. With the exception of broadly defined commodities and US and foreign property shares, global markets posted solid gains last year.

The top 2020 performer: US stocks. The Russell 3000 Index surged 20.9% last year. A close second: equities in emerging markets. MSCI Emerging Markets Index added 18.3% for the 12 months through Dec. 31.

The deepest 2020 loss for the major asset classes: US real estate investment trusts (REITs). MSCI US REIT Index shed 7.6% last year, even after factoring in the sector’s relatively rich distributions.

For the monthly profile, December was kind to all corners, led by a sizzling 7.4% advance in emerging markets stocks. The smallest gain last month: a fractional one-basis point uptick for cash via S&P US T-Bill 0-3 Month Index.

The bullish tailwind in beta risk last year gave cover to conventional portfolio strategies with long-only bias. Drawing on mostly across-the-board gains in 2020, it was hard to lose money, bordering on impossible. As a measure of the upside bias, the Global Market Index (GMI) posted a strong total return last year. This unmanaged benchmark (maintained by, which holds all the major asset classes (except cash) in market-value weights, rose 14.4% in 2020 on a total-return basis.

For context, the US stock market (Russell 3000 Index) climbed nearly 21% last year vs. a 7.5% total return for US investment-grade bonds (Bloomberg US Aggregate Bond Index). GMI’s 14.4% rise in 2020, by comparison, was middling.

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By James Picerno

2 thoughts on “Major Asset Classes | December 2020 | Performance Review

  1. Rea

    could you explain me (novice that pick an interest in this topic), why the stock market is growing while the economy seems to be “collapsing”?

  2. James Picerno Post author

    The short answer, which is only partially persuasive at best, is that the market is pricing in improving economic conditions for the future. The pandemic pricing event occurred last spring, when the market collapsed. But as the beyond-pandemic outlook improved, the market rebounded. Keep in mind too that the main stock market indices reflect a heavy dose of big-cap tech firms, which seem to be faring considerably better in the economy vs. companies overall. That, at least, is one explanation. Alternatively, many skeptics assert that the market has become disconnected from the economy. This NYT story goes deeper:

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