by: Lawrence Hamtil
Credit Suisse's Global Investment Returns Yearbook is always fun to read, not least because it is always full of fascinating financial history for the various developed markets with lengthy track records. While I am not attempting here to offer a competing analysis to their wonderful product, I do think it would be interesting to look at the major developed markets with only more recent data (MSCI's in this case), and to add one or two twists to the data for a slightly different perspective.
First of all, as I argued in a previous post, only the U.S. and Japan among individual markets offer investors truly diversified equity exposure, both among individual companies, and among various sectors. However, if we count Europe as one major market, a fair comparison can be made among the U.S., Japan, and Europe. Since MSCI's data begin (all gross returns in USD terms), all three markets have generated healthy average returns for investors, but with the U.S. coming out slightly ahead:
However, breaking down Europe into individual markets reveals a wide disparity between returns, with the Scandinavian countries Denmark and Sweden leading the pack, while Italy and Austria lagged substantially:
Breaking the data down further shows that while several markets like Japan and Spain generated decent returns on average, investor experiences in those particular nations were likely much different, because median returns were much less, which demonstrates the unusual cyclicality of these markets:
One caveat: Credit Suisse's yearbook looks at real equity returns, whereas the returns shown here are nominal. That being said, the takeaway here seems to be that the most successful markets have been those with stable inflation over the long-term (pre-euro Spain and Italy are big exceptions here), while the most successful concentrated markets have been those with heavy weights in less cyclical industries such as healthcare (Switzerland; Denmark), or consumer staples (Belgium; Netherlands).
Disclosure: The results are hypothetical results and are NOT an indicator of future results and do NOT represent returns that any investor actually attained. Indexes are unmanaged, do not reflect management or trading fees, and one cannot invest directly in an index.
This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Fortune Financial Advisors, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Fortune Financial Advisors, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.
The information provided above is obtained from publicly available sources and it is believed to be reliable. However, no representation or warranty is made as to its accuracy or completeness.
Lawrence Hamtil is a fourteen-year veteran of the financial services industry, having served clients in all aspects of the business during his career, which started in 2002. In 2005, he joined Dennis Wallace of Fortune Financial Services, LLC, becoming, at the time, one of Multi-Financial Securities, Inc's youngest registered representatives. In 2008, Dennis and Lawrence made the decision to become fully independent by founding their own Registered Investment Advisory (RIA), Fortune Financial Advisors, LLC. He serves clients in the United States and Europe. His financial commentary has been referenced in Barron’s online edition.
You can connect with Lawrence on Twitter ( @lhamtil) or via email, firstname.lastname@example.org.
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