Bonds Outperform Equities In 2011

Includes: BNO, CRB, EEM, GLD
by: Joseph Poma

Interest rates continued lower through 2011 and credit rating agencies went rampant downgrading the credit ratings of numerous countries, even placing several financial stalwarts on a negative outlook moving forward. Despite all of this, it was the bond indices that outperformed the majority of the market! Below is a table which gives a detailed performance for several asset classes.

Performance of Asset Classes
U.S. 10 Year Treasury +16.7%
Brent Crude Oil (NYSEARCA:BNO) +13.9%
Gold (NYSEARCA:GLD) +8.9%
Barclays Capital U.S. Corporate Bonds +8.15%
JPM Global Government Bonds +6.34%
S&P 500 Index (NYSEARCA:SPY) -1.12%
CRB Commodities Index (Pending:CRB) -8.4%
MSCI Emerging Equities (NYSEARCA:EEM) -18.3%

This brief sampling is indicative of the overal market performance, which is contrary to what many investors anticipated. Since the beginning of the year investment advisors were advising clients to diversify their portfolios to move away from bonds to protect from losses if interest rates were to increase. This would have been one of the few cases where cancelling that meeting with the investment advisor would have been rather beneficial.

This week markets open to begin trading for 2012, and the outlook is still quite hazy. December finished off with several strong market indicators coming in above expectations and it the market has a history of performing well on presidential election years. Personally, I am bullish moving forward, having confidence in a revival of U.S. employment and increased spending.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.