Download Asset Classes Over Time

Asset Classes
Over Time
Investing in diverse types of assets can
possibly guard your investments from
losses to market volatility, while potentially
allowing them to grow.
How an investment
can grow over time
DOMESTIC STOCK1
FOREIGN STOCK2
Investments in different asset classes have both benefits and
drawbacks: stocks may potentially see tremendous growth,
but are subject to market volatility. Bonds and short-term
investments typically see smaller but steadier growth.
BOND3
SHORT-TERM INVESTMENTS4
INFLATION
Growth of $10,000 from 1988 – 2012
Financial Crisis
$90K
The Black
Monday Crash
$80K
The Internet
Bubble Bursts
$70K
$60K
The Housing
Boom
$50K
The 90’s Boom
$40K
$30K
$20K
$10K
'88
'89
'90
'91
'92
'93
'94
'95
'96
'97
'98
'99
'00
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11 '12
Source: FactSet (data as of 9/30/12)
“
Timing the Market
“
Instead of being tempted to time the market,
assess your investment mix and confirm it's in line
with your timeframe and objectives for the money
Unfortunately, trying to time the market
is notoriously difficult. Studies have
shown that investors trail the market
significantly. This means the decisions
investors make about diversification and
when to get into or out of the market, as
well as fees, cause them to generate far
lower returns than the overall market.
Chris McDermott, a CFP® and senior vice president at Fidelity
Investments.
Views expressed are as of the date indicated and may change
based on market and other conditions. Unless otherwise noted,
the opinions provided are those of the speaker or author, as
applicable, and not necessarily those of Fidelity Investments.
January 1, 1991, to December 31, 2010
AVERAGE RETURN
OF AN INVESTOR
AVERAGE RETURN
OF THE MARKET
9.14%
8.76%
6.89%
3.83%
2.56%
1.01%
S&P 500®
Index
AverageEquity
Fund
Investor
Hypothetical
Balanced
Investment*
Average Asset
Allocation Fund
Investor
Barclays Capital Average Fixed
Aggregate Bond Income Fund
Index†
Investor
Source: Quantitative Analysis of Investor Behavior (QAIB) 2011, DALBAR Inc. www.dalbar.com
* Source: FMRCo. Based on the performance of an investment weighted 60% to the S&P 500 Index and 40% to the Barclays Capital Aggregate Bond
Index. It is not possible to invest directly in an index. Past performance is no guarantee of future results.
†
Bonds are represented by the Barclays Capital U.S. Aggregate Bond Index for bonds. Barclays Capital U.S. Aggregate Bond Index is a market
value-weighted index that covers the U.S. fixed-rate investment grade bond market with index components for government and corporate
securities, mortgage pass-through securities, and asset-backed securities with maturities of one year or more.
Returns vary for different asset classes
DOMESTIC STOCK1
FOREIGN STOCK2
Investing in a mixture of asset classes helps to account for fluctuations and
market performance over time.
BOND3
SHORT-TERM INVESTMENTS4
38
30%
33
32
30
29
22
20%
10%
Asset Return
8
8
1990
1995
2000
-2
-10%
2005
2010
-12
-20%
-30%
-40%
Source: FactSet (data as of 9/30/12)
Diversifying for your goals
Allocating your assets across diverse classes, according
to your risk tolerance at different life stages, may be a
strategy that harnesses both growth and conservation.
Aggressive Growth
Growth
asset allocation
As a young
person, you
can possibly
afford to take
more risk, in
hopes of
seeing more
growth.
Average
Return
asset allocation
15%
25
%
25%
60
%
5
%
9.42%
21
DOMESTIC STOCK1
BOND3
FOREIGN STOCK2
SHORT-TERM INVESTMENTS4
Balanced
asset allocation
Conservative
asset allocation
14%
49%
%
8.81%
35
40%
%
10% 15
7.90%
%
50%
6%
30%
Later in life,
a less risky
approach to
investing could
help to guard
your assets.
6.04%
Sources: Ibbotson Associates, 2012 (1926 - 2011)
Past performance is no guarantee of future results. Returns include the reinvestment of dividends and other earnings. This chart is for illustrative
purposes only and does not represent actual or implied performance of any investment option. The purpose of the target asset mixes is to show
how target asset mixes may be created with different risk and return characteristics to help meet a participant's goals. You should choose your own
investments based on your particular objectives and situation. Remember, you change how your account is invested. Be sure to review your
decisions periodically to make sure they are still consistent with your goals. You should also consider any investments you may have outside the
plan when making your investment choices.
Government bonds and corporate bonds have more moderate short-term price fluctuation than stocks but provide lower potential long-term
returns. U.S. Treasury bills maintain a stable value (if held to maturity), but returns are generally only slightly above the inflation rate.
These target asset mixes were developed by Strategic Advisers, Inc., a registered investment adviser and a Fidelity Investments company.
This chart is for illustrative purposes only and does not represent actual or implied performance of any investment option.
1. Domestic Stocks are represented by the Standard & Poor’s 500 Index (S&P 500®). The S&P 500® Index is a market capitalization–weighted index
of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance.
2. Foreign Stocks are represented by the Morgan Stanley Capital International Europe, Australasia, Far East Index for the period from 1970 to the last
calendar year. Foreign Stocks prior to 1970 are represented by the S&P 500®.
3. Bonds are represented by the U.S. Intermediate Government Bond Index, which is an unmanaged index that includes the reinvestment of
interest income.
4. Short-term instruments are represented by U.S. Treasury bills, which are backed by the
full faith and credit of the U.S. government.
It is not possible to invest directly in an index. Stock prices are more volatile than those of
other securities.Diversification/Asset Allocation does not ensure a profit or guarantee
against loss.
Past performance is no guarantee of future results.
Keep in mind that investing involves risk. The value of your investment will fluctuate over
time and you may gain or lose money.
Fidelity Brokerage Services LLC
Member NYSE, SIPC
900 Salem Street, Smithfield, RI 02917
634890.1.0