U.S. equities recorded relatively positive price returns in 2013. As measured by price performance of the S&P 500, stocks returned 32.4 percent. Smaller capitalization stocks did even a bit better in 2013 with price appreciation of just less than 39 percent.
Developed equity markets outside of the U.S. and Canada reported a respectable 23.3 percent price increase in 2013. Viewed in U.S. dollar terms, equities in Germany increased by more than 32 percent in 2013., and aggregate equity returns in France were up approximately 28 percent.
Within the U.S. equity styles, small capitalization companies with growth biases returned more than 43 percent in the past year. Large capitalization stocks represented by U.S. indexes generally underperformed small and mid-capitalization equities. Large capitalization value stocks reported price appreciation of 32.5 percent in 2013.
Master limited partnerships, as reported by one index, returned 27.6 percent in 2013 after returning 4.8 percent in 2012. Over the past 10 years, master limited partnerships have averaged approximately 15 percent annual return. Contributing to these returns is the ongoing development of oil and gas reserves and related infrastructure in the U.S.
In the fixed income sector, high-yield securities were the top-performing group with a total return of 7.4 percent in 2013. This follows a strong year in 2012 for this sector where a return of 15.8 percent was reported. Narrowing credit spreads and relatively low corporate defaults contributed to the positive returns over the past few years.
Emerging market debt indexes showed a return of about negative 4 percent last year after returning almost 18 percent in 2012. Emerging market equities showed a similar return pattern over the past two years. After a return of just less than 19 percent in 2012, aggregate emerging market equities logged a negative 2.3 percent in 2013.
Past performance is no guarantee of future returns. Relative valuation levels, the macroeconomic environment, fiscal policies and monetary actions all must be considered when investing and allocating capital.
Kirby Brown is the CEO of Beneficial Financial Group based in Salt Lake City.
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