An asset class is a group of investments that have similar characteristics. Asset classes tend to behave in similar ways. For example, within equities, large companies tend to behave similarly. Each group is guided by similar rules and economic conditions, which makes them correlated. Correlation measures the degree to which asset classes are related—or are linked—together. There is a multitude of asset classes ranging from U.S. equities to real estate. No one knows which asset class will perform and history is certainly no guarantee, as you can see by the chart below. Most long-term investors agree that a diversified approach is a sound strategy for managing risk and returns in an uncertain world. Quick Take: It's important to focus on the big picture instead of the best and worst performing asset classes. 6 A Review of Asset Class Performance Over the Last 26+ Years 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 falseUS LC 37.6% falseUS SC 28.5% falseAlts 21.5% falseDiv Port 20.3% falseUS HYB 19.2% falseIG Bond 18.5% falseMunis 17.5% falseREITs 12.2% falseFor Dev 11.4% falseIntl SC 0.2% falseEM -5.2% falseREITs 37.1% falseUS LC 23.0% falseAlts 21.1% falseUS SC 16.5% falseDiv Port 12.1% falseUS HYB 11.4% falseFor Dev 6.9% falseEM 6.0% falseMunis 4.4% falseIG Bond 3.6% falseIntl SC 2.2% falseUS LC 33.4% falseUS SC 22.4% falseREITs 19.7% falseAlts 13.4% falseDiv Port 13.4% falseUS HYB 12.8% falseIG Bond 9.7% falseMunis 9.2% falseFor Dev 2.3% falseEM -11.6% falseIntl SC -18.7% falseUS LC 28.6% falseFor Dev 18.8% falseIG Bond 8.7% falseDiv Port 8.6% falseMunis 6.5% falseIntl SC 5.0% falseAlts 2.6% falseUS HYB 1.9% falseUS SC -2.6% falseREITs -17.0% falseEM -25.3% falseEM 66.4% falseIntl SC 32.7% falseAlts 31.3% falseFor Dev 27.9% falseUS SC 21.3% falseUS LC 21.0% falseDiv Port 15.3% falseUS HYB 2.4% falseIG Bond -0.8% falseMunis -2.1% falseREITs -2.6% falseREITs 31.0% falseMunis 11.7% falseIG Bond 11.6% falseAlts 5.0% falseDiv Port -0.3% falseUS SC -3.0% falseUS HYB -5.9% falseUS LC -9.1% falseFor Dev -13.4% falseIntl SC -18.1% falseEM -30.6% falseREITs 12.4% falseIG Bond 8.4% falseUS HYB 5.3% falseMunis 5.1% falseAlts 4.6% falseUS SC 2.5% falseDiv Port -1.2% falseEM -2.6% falseUS LC -11.9% falseIntl SC -14.6% falseFor Dev -21.4% falseIG Bond 10.3% falseMunis 9.6% falseREITs 3.6% falseUS HYB -1.4% falseAlts -1.5% falseDiv Port -5.1% falseIntl SC -5.7% falseEM -6.2% falseFor Dev -15.8% falseUS SC -20.5% falseUS LC -22.1% falseIntl SC 57.6% falseEM 55.8% falseUS SC 47.3% falseFor Dev 39.4% falseREITs 36.2% falseUS HYB 29.0% falseUS LC 28.7% falseDiv Port 25.8% falseAlts 19.6% falseMunis 5.3% falseIG Bond 4.1% falseREITs 33.2% falseIntl SC 29.3% falseEM 25.6% falseFor Dev 20.4% falseUS SC 18.3% falseDiv Port 13.0% falseUS HYB 11.1% falseUS LC 10.9% falseAlts 9.0% falseMunis 4.5% falseIG Bond 4.3% falseEM 34.0% falseIntl SC 22.6% falseFor Dev 14.5% falseREITs 13.8% falseAlts 9.3% falseDiv Port 7.9% falseUS LC 4.9% falseUS SC 4.6% falseMunis 3.5% falseUS HYB 2.7% falseIG Bond 2.4% falseREITs 36.0% falseEM 32.1% falseIntl SC 26.9% falseFor Dev 25.7% falseUS SC 18.4% falseUS LC 15.8% falseDiv Port 15.1% falseAlts 12.9% falseUS HYB 11.9% falseMunis 4.8% falseIG Bond 4.3% falseEM 39.4% falseFor Dev 12.4% falseIntl SC 10.8% falseAlts 10.0% falseIG Bond 7.0% falseDiv Port 6.7% falseUS LC 5.5% falseMunis 3.4% falseUS HYB 1.9% falseUS SC -1.6% falseREITs -17.6% falseIG Bond 5.2% falseMunis -2.5% falseAlts -19.0% falseDiv Port -23.1% falseUS HYB -26.2% falseUS SC -33.8% falseUS LC -37.0% falseREITs -39.2% falseFor Dev -43.6% falseIntl SC -50.2% falseEM -53.3% falseEM 78.5% falseIntl SC 62.9% falseUS HYB 58.2% falseFor Dev 33.7% falseREITs 28.5% falseUS SC 27.2% falseUS LC 26.5% falseDiv Port 26.2% falseAlts 20.0% falseMunis 12.9% falseIG Bond 5.9% falseREITs 28.1% falseUS SC 26.9% falseIntl SC 25.2% falseEM 18.9% falseUS HYB 15.1% falseUS LC 15.1% falseDiv Port 13.6% falseAlts 10.3% falseFor Dev 9.0% falseIG Bond 6.5% falseMunis 2.4% falseMunis 10.7% falseREITs 9.4% falseIG Bond 7.8% falseUS HYB 5.0% falseUS LC 2.1% falseDiv Port 0.3% falseUS SC -4.2% falseAlts -5.3% falseFor Dev -12.2% falseEM -18.4% falseIntl SC -18.5% falseIntl SC 18.5% falseEM 18.2% falseREITs 17.1% falseUS SC 16.4% falseFor Dev 16.4% falseUS LC 16.0% falseUS HYB 15.8% falseDiv Port 11.9% falseMunis 6.8% falseAlts 6.4% falseIG Bond 4.2% falseUS SC 38.8% falseUS LC 32.4% falseFor Dev 21.0% falseIntl SC 19.7% falseDiv Port 13.5% falseAlts 9.1% falseUS HYB 7.4% falseREITs 1.2% falseIG Bond -2.0% falseEM -2.6% falseMunis -2.6% falseREITs 32.0% falseUS LC 13.7% falseMunis 9.1% falseDiv Port 6.6% falseIG Bond 6.0% falseUS SC 4.9% falseAlts 3.0% falseUS HYB 2.5% falseEM -2.2% falseIntl SC -4.0% falseFor Dev -4.3% falseREITs 4.5% falseMunis 3.3% falseIntl SC 2.6% falseUS LC 1.4% falseIG Bond 0.6% falseDiv Port -0.8% falseAlts -1.1% falseFor Dev -3.0% falseUS SC -4.4% falseUS HYB -4.5% falseEM -14.9% falseUS SC 21.3% falseUS HYB 17.1% falseUS LC 12.0% falseEM 11.2% falseDiv Port 7.8% falseREITs 6.7% falseAlts 5.4% falseIntl SC 3.9% falseFor Dev 2.8% falseIG Bond 2.7% falseMunis 0.3% falseEM 37.3% falseIntl SC 31.7% falseFor Dev 24.2% falseUS LC 21.8% falseUS SC 14.7% falseDiv Port 14.0% falseAlts 8.7% falseUS HYB 7.5% falseMunis 5.5% falseREITs 3.8% falseIG Bond 3.5% falseMunis 1.3% falseIG Bond 0.0% falseUS HYB -2.1% falseREITs -4.2% falseUS LC -4.4% falseAlts -4.5% falseDiv Port -5.5% falseUS SC -11.0% falseFor Dev -14.1% falseEM -14.6% falseIntl SC -18.2% falseUS LC 31.5% falseUS SC 25.5% falseREITs 23.1% falseFor Dev 22.5% falseIntl SC 22.4% falseDiv Port 18.5% falseEM 18.4% falseUS HYB 14.3% falseAlts 10.4% falseIG Bond 8.7% falseMunis 7.5% falseUS SC 20.0% falseUS LC 18.4% falseEM 18.3% falseIntl SC 14.2% falseAlts 11.6% falseDiv Port 11.0% falseFor Dev 7.6% falseIG Bond 7.5% falseUS HYB 7.1% falseMunis 5.2% falseREITs -11.2% falseREITs 45.9% falseUS LC 28.7% falseUS SC 14.8% falseIntl SC 12.9% falseFor Dev 12.6% falseDiv Port 11.7% falseAlts 10.3% falseUS HYB 5.3% falseMunis 1.5% falseIG Bond -1.5% falseEM -2.5% falseAlts -4.2% falseMunis -8.5% falseUS HYB -11.2% falseIG Bond -13.0% falseFor Dev -14.3% falseDiv Port -15.5% falseUS LC -18.1% falseIntl SC -20.0% falseEM -20.1% falseUS SC -20.4% falseREITs -26.0% Diversified Portfolio Allocation: Investment Grade Bonds (IG Bonds): 30%, Municipals (Munis): 5%, U.S. High Yield Bonds (US HYB): 5%, U.S. Large Cap Equity: (US LC): 20%, U.S. Small Cap Equity (US SC): 10%, Foreign Developed Equity (For Dev): 10%, International Small Cap (Intl SC): 5%, Emerging Markets (EM): 5%, U.S. Real Estate (REITs): 5%, and Alternatives (Alts): 5%. Source: Bloomberg, Dow Jones, FactSet, MSCI Russell, Standard & Poor’s as of December 31, 2022. The indices are unmanaged, are not available for investment, and do not incur expenses. Click here for index definitions. The diversified portfolio is rebalanced to the original allocation annually. The performance shown is not indicative of the performance of any mutual fund or other investment product. Past performance is no guarantee of future results. Diversified Portfolio Investment Grade Bonds30%U.S. Large Cap Equity (US LC)20%U.S. Small Cap Equity (US SC)10%Foreign Developed Equity (For Dev)10%Municipals (Munis)5%U.S. High Yield Bonds (US HYB)5%International Small Cap (Int SC)5%Emerging Markets (EM)5%U.S. Real Estate (REITs)5%Alternatives (Alts)5% The indices are unmanaged, are not available for investment, and do not incur expenses. Click here for representative indices and definitions Past performance is no guarantee of future results. Investing involves risk, including possible loss of principal. Diversification does not guarantee a profit or protect against a loss in declining markets. Investments in debt securities are subject to credit and interest rate risk. An increase in interest rates typically causes the value of bonds and other fixed income securities to fall. Investments in international securities are subject to certain risks of overseas investing including currency fluctuations and changes in political and economic conditions, which could result in significant market fluctuations. These risks are magnified in emerging markets. Investments in small-capitalization companies are subject to greater price volatility, lower trading volume and less liquidity than investing in larger, more established companies. Real estate investments are subject to factors such as changing general and local economic, financial, competitive and environmental conditions. Alternative investments are speculative, subject to high return volatility and involve a high degree of risk including, but not limited to, the risks associated with leverage, derivative instruments such as options and futures, distressed securities, may be illiquid on a long term basis and short sales. There can be no assurance that these types of strategies will achieve their objectives or avoid substantial losses. Alternative investments may also be subject to significant fees and expenses. Investments in emerging markets are subject to risks such as erratic earnings patterns, economic and political instability, changing exchange controls, limitations on repatriation of foreign capital and changes in local governmental attitudes toward private investment, possibly leading to nationalization or confiscation of investor assets. Market Risk—Market prices of investments held by the Fund may fall rapidly or unpredictably due to a variety of economic or political factors, market conditions, disasters or public health issues, or in response to events that affect particular industries or companies. AMG Distributors, Inc., a member of FINRA/SIPC. Keep Calm & Stay Connected Download the Brochure Our complete guide for investment success Order Your Print Copy Order Now Share This Page Contact Us 800.368.4410 clientservice@amg.com