A couple of great charts from the Visual Capitalist showing how major asset classes performed in 2021 (click below to enlarge). It was another strong year for developed market stocks. The S&P 500 was up nearly 27% beating 2020's impressive 15.5% gain, with every sector positive. The MSCI EAFE (developed markets xUSA) was up close to 8% (versus +5% in 2020). But the year's best performing asset was Bitcoin, up nearly 60%, which is great...but far less than the nearly 380% the digital coin gained in 2020. Of course, now that Bitcoin has gone mainstream (as evinced by its nearly $1 trillion market cap and constant market tracking on CNBC alongside major stock indices), such triple-digit returns are unlikely, even as its volatility and correlation to public equities goes up.
Energy also had a great 2021, after struggling mightily in 2020. Oil was up over 56% after dropping more than 21% last year. Energy was also the best performing sector in the S&P 500, up nearly 48%, followed by Real Estate (+42.5%), Tech (+33.4%) and Financials (+32.5%). The "weakest" S&P 500 sector was Utilities, up only 14%.
What didn't work in 2021 was fixed income and EM stocks. Treasuries and bonds fell 2.5% and 1.2%, respectively, as inflation and interest rate volatility jumped. The benchmark Bloomberg Barclays US Aggregate Index declined by 1.5%, its first annual loss since 2013 and only for the fourth time in nearly 40 years. EM economies are beneficiaries of low US interest rates and so, naturally, rising rates also hurt EM stocks. Surprisingly, last year's best performers silver (+47.4%) and gold (+24.6%), struggled in 2021, despite a long history of being an inflation hedge. Perhaps because of Bitcoin?
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