The US stock market has delivered an average annual return of around 10%. In most years, however, the return has been above or below the average, often by a significant amount. Understanding the range of potential outcomes can help investors stay disciplined and increase the odds of a successful investment experience in the long term.
Predicting future events correctly, or how the market will react to future events, is a difficult exercise. It is important to understand, however, that market volatility is a part of investing. To enjoy the benefit of higher potential returns, investors must be willing to accept increased uncertainty.
As of Q2, these portfolios illustrate the performance of different global stock/bond mixes and highlight the benefits of diversification.
Down markets and interest rate fluctuations are inevitable, both as part of the normal cycle and due to specific events. Studies show that investors who panic and react to these market events often underperform.
Data shows that smart beta indices sometimes provide investors with exposure to size, value, and profitability premiums but may do so inefficiently and may subject investors to unnecessary risks.