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 are 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.
6A Review of Asset Class Performance Over the Last 24 Years
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: Barclays, Bloomberg, Dow Jones, FactSet, MSCI Russell, Standard & Poor’s as of March 31, 2020. 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.
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.
AMG Distributors, Inc., a member of FINRA/SIPC.
You are now leaving the AMG Funds web site: The link you have selected is located on another web site. Please click OK below to leave the AMG Funds site and proceed to the selected site. AMG Funds does not endorse this web site, its sponsor, or any of the policies, activities, products or services offered on the site, or by any advertiser on the site. AMG Funds has no control of the content or data shown on this site, and while AMG Funds has no reason to doubt the reliability of the data shown, its accuracy is not guaranteed. Furthermore, AMG Funds takes no responsibility for the accuracy or factual correctness of any information posted to third party web sites.
Thank you for your interest in AMG Funds.OK