A look at the best and worst performing investments shows equities are still giving good returns despite volatility in the markets.
European and North American equities came out top of the study for 2013 by investment managers Barings.
But a real underlying issue for investors is deciding when to switch in and out of the markets.
Fund managers say North American equities were out in front as the best asset class for investors last year, driven by a strongly recovering economy in the US.
This growth is fuelled by consumer confidence, improving house prices, more money going into shop tills and better job availability.
Topsy-turvy showing
In general, although equities shone in Europe and North America, many assets have seen highs and lows over recent years and the top and bottom performers can change from year to year.
One example is emerging equities have had a topsy-turvy performance since 2007, when Barings started tracking returns from asset classes.
They were top in 2007, 2009 and 2012, but bottom in 2008 and 2011. In 2010, they sank from top the year before to third and in 2013, dropped into the bottom three from top the year before.
Barings suggest that armchair investors would have a difficult time tracking performance and when to make decisions about moving their money between asset classes to reduce risk and increase returns.
Andrew Cole, manager of the Baring Multi Asset Fund, said: “Fund popularity in Europe and North America was boosted by investors paying higher multiples for lower earnings in the belief they are taking a long term view as economies both sides of the Atlantic improve.
Gold loses shine
“Japan is different. Earnings are higher but many investors are worried that they cannot be maintained in the long term.
“Gold was the worst performer last year and we have some real concerns about putting any money into the precious metal as we do not see prices reviving for quite some time.”
Gold was the top asset class in 2010, says the report, but gradually sank to the bottom of the pile, coming third in 2011, in the bottom four in 2012 and hitting last place in 2013.
“The expectation is for continuing growth in developed countries,” said Cole. “I think equities will remain the preferred asset class for the time being, but probably below last year’s returns.”
Japanese and UK equities took third and fourth place as best performers last year.
