Developed equity markets outside North America lead 3rd quarter asset returns

Published: Tuesday, Oct. 8 2013 9:22 a.m. MDT

In this Friday, May 31, 2013 file photo, trader Robert Moran, right, works on the floor of the New York Stock Exchange.

Richard Drew, Associated Press

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Looking across a number of indexes representing a broad array of asset sectors across the globe, the top performing asset sector in the third quarter of 2013 was an index representing developed market equity exposure outside of North America. This index returned 11.6 percent in the quarter and 16.6 percent year-to=date.

The top performing broad asset sector for the year-to-date period is an index that represents smaller capitalization companies trading on U.S. exchanges. With a year-to-date return of 27.7 percent, this index has significantly outperformed the larger company-focused S&P 500 index by 7.9 percent.

Real estate investment trusts, or REITs, were the bottom-performing asset class in the third quarter with a reported return of negative 2.6 percent. Year-to-date, the REIT index reported a return of 3 percent. In 2012, the REIT index returned a relatively attractive 19.7 percent.

Within the U.S. equity markets, the top performing style for the third quarter was the index representing smaller capitalization, growth companies with a return of 12.8 percent. The bottom performing style for the most recent quarter was the large capitalization, value-oriented index with a return of 3.9 percent.

Equities within the S&P 500 index can be divided into 10 industry sectors. For the third quarter, the top returning industry sector was the materials group with a return of 10.3 percent. The telecom sector was the bottom performing segment with a return of negative 4.4 percent.

In the fixed income sector, the High Yield index showed the highest return in the third quarter of 2013. With a reported return of only 2.3 percent, those invested in this sector outperformed the more diversified fixed income aggregate index by only 1.7 percent in the quarter.

Chasing past performance is generally a losing strategy. Disciplined processes that seek to minimize emotional reactions to market movements often result in a more desirable return profile.

As with any investment, past performance is no guarantee of future returns. Investment strategies should incorporate the risk tolerance, liquidity needs, investment horizon, understanding of the asset strategies, initial and ongoing costs and similar factors of those whose funds are being invested.

Kirby Brown is the CEO of Beneficial Financial Group in Salt Lake City.

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