The Best And Worst Performing Asset Classes Of 2016

The Best And Worst Performing Asset Classes Of 2016

2016 was a bit of rollercoaster ride politically and 2017 is certainly shaping up to be the same. As ever, some asset classes responded well whilst others didn’t. Some of the worst performing asset classes in 2016 included UK commercial property, which saw returns of only 1.4% and cash, which was up by only 0.4%.

Interest rates have been so low in the UK for such a long time that it’s hard to remember when they were ever high, and, as a consequence, savers have lost money in real terms. Since 2009, cash savings have only returned a cumulative 4.8% whilst the cost of living has risen by nearly 20%.

Conversely, if you had put your money into a mix of property and equities, then you would have doubled your money over the same period with a typical multi asset fund returning approximately 80% before charges.

Multi Asset Funds performing well

2016 was a good year for multi asset funds and, if you were a sterling-based investor, you would have enjoyed your best returns since 2009. A typical balanced multi asset fund would have returned around 12% last year before charges, which puts the returns on cash savings somewhat into perspective.

Of course, Brexit has had a big impact on this. With a 17% devaluation in the pound against the dollar, overseas commodities and equities have risen in value and its quite telling that 80% of FTSE 100 earnings came from overseas in 2016. The weak pound has also boosted UK equity returns and gilts have held their own as well.

What’s in store for 2017?

2017 promises to be another year of ups and downs. Initially signs are positive, with stocks receiving a boost based on the large scale fiscal undertakings that are expected under Donald Trump’s presidency. Interest rates are expected to stay below the level of inflation and the overall investment climate is looking good but we all need to be wary of the full ramifications of Brexit and what’s happening in the US, as well as the number of elections that will be taking place across Europe in 2017. All of these have the capacity to rock the boat so we need to keep these events on our investment radar.