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The decade in seven charts

DATE POSTED:January 17, 2020

The 10 years since the great financial crisis of 2008-2009 saw global central banks unleash unprecedented monetary policy accommodation. Quantitative easing and sustained negative or very low real interest rates spurred risk appetite that has delivered overwhelmingly positive returns for equities in almost every sector and every major economy.

The US stands apart as the dominant performer in terms of equity returns, outperforming every comparable country, and both the FTSE Developed and All-World Indexes.

Developed market equity total returns by country in the 2010s (local currency, total return).

Source: FTSE Russell. Data from 12/31/09 to 12/12/19, based on the FTSE All-World Index Family. Local currency. Past performance is no guarantee of future results. Please see the end for important legal disclosures.

Developed market equity total returns by region in the 2010s (local currency, total return)

Source: FTSE Russell. Data from 12/31/09 to 12/12/19 based on the FTSE All-World Index Family. Local currency. Past performance is no guarantee of future results. Please see the end for important legal disclosures.

In EM the big winners were predominantly Asian: Taiwan, Indonesia and China.

Emerging market equity total returns by country in the 2010s (local currency, total return)

Source: FTSE Russell. Data from 12/31/09 to 12/12/19, based on the FTSE All-World Index Family. Local currency. Past performance is no guarantee of future results. Please see the end for important legal disclosures.

The US outperformance was in large part due to its technology sector weighting versus the rest of the world. Tech was by far the strongest performer in FTSE All World. (It’s hard to find a developed market equity sector that lost money in the 2010s, barring utility stocks in some European territories.)

FTSE All-World Index total return by sector in the 2010s (local currency, total return)

Source: FTSE Russell. Data from 12/31/09 to 12/12/19, based on the FTSE All-World Index Family. Local currency. Past performance is no guarantee of future results. Please see the end for important legal disclosures.

Total return from tech sector in the 2010s by region (local currency, total return)

Source: FTSE Russell. Data from 12/31/09 to 12/12/19, based on the FTSE All-World Index Family. Local currency. Past performance is no guarantee of future results. Please see the end for important legal disclosures.

In fixed income, longer duration (7-10 yr) government bonds delivered uniformly positive returns, and US outperformed other major markets, returning close to 60% in a decade that began with concerns about the safety of government bonds in the aftermath of the GFC.

7-10 year Government Bonds total returns from start 2010 (local currency, total return)

Source: FTSE Russell. Data from 12/31/09 to 12/12/19. Local currency. Past performance is no guarantee of future results. Please see the end for important legal disclosures.

The long-term positive performance of the major asset classes raises two big questions for investors. First, how long will the accommodative policy measures, which supercharged returns, continue? Second, if that accommodation does continue will the positive correlation between the performance of equities and bonds that has been established over the last 10 years be maintained?

Source: FTSE Russell as at 12/17/2019. Local currency. Past performance is no guarantee of future results. Please see the end for important legal disclosures.

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This article first appeared on January 10 on the FTSE Russell blog

Photo Credit: Magdalena Roeseler via Flickr Creative Commons

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