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 is 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. Quick Take: It's important to focus on the big picture instead of the best and worst performing asset classes. 6 A Review of Asset Class Performance Over the Last 29 Years 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD falseUS LC 37.6% falseUS SC 28.5% falseAlts 21.5% falseDiv Port 20.3% falseUS HYB 19.2% falseIG Bond 18.5% falseMunis 17.5% falseREITs 12.2% falseFor Dev 11.4% falseIntl SC 0.2% falseEM -5.2% falseREITs 37.1% falseUS LC 23.0% falseAlts 21.1% falseUS SC 16.5% falseDiv Port 12.1% falseUS HYB 11.4% falseFor Dev 6.9% falseEM 6.0% falseMunis 4.4% falseIG Bond 3.6% falseIntl SC 2.2% falseUS LC 33.4% falseUS SC 22.4% falseREITs 19.7% falseAlts 16.8% falseDiv Port 13.4% falseUS HYB 12.8% falseIG Bond 9.7% falseMunis 9.2% falseFor Dev 2.3% falseEM -11.6% falseIntl SC -18.7% falseUS LC 28.6% falseFor Dev 18.8% falseIG Bond 8.7% falseDiv Port 8.6% falseMunis 6.5% falseIntl SC 5.0% falseAlts 2.6% falseUS HYB 1.9% falseUS SC -2.5% falseREITs -17.0% falseEM -25.3% falseEM 66.4% falseIntl SC 32.7% falseAlts 31.3% falseFor Dev 27.9% falseUS SC 21.3% falseUS LC 21.0% falseDiv Port 15.3% falseUS HYB 2.4% falseIG Bond -0.8% falseMunis -2.1% falseREITs -2.6% falseREITs 31.0% falseMunis 11.7% falseIG Bond 11.6% falseAlts 5.0% falseDiv Port -0.3% falseUS SC -3.0% falseUS HYB -5.9% falseUS LC -9.1% falseFor Dev -13.4% falseIntl SC -18.1% falseEM -30.6% falseREITs 12.3% falseIG Bond 8.4% falseUS HYB 5.3% falseMunis 5.1% falseAlts 4.6% falseUS SC 2.5% falseDiv Port -1.2% falseEM -2.6% falseUS LC -11.9% falseIntl SC -14.6% falseFor Dev -21.4% falseIG Bond 10.3% falseMunis 9.6% falseREITs 3.6% falseUS HYB -1.4% falseAlts -1.5% falseDiv Port -5.0% falseIntl SC -5.7% falseEM -6.2% falseFor Dev -15.8% falseUS SC -20.5% falseUS LC -22.1% falseIntl SC 57.6% falseEM 55.8% falseUS SC 47.3% falseFor Dev 39.4% falseREITs 36.2% falseUS HYB 29.0% falseUS LC 28.7% falseDiv Port 25.8% falseAlts 19.5% falseMunis 5.3% falseIG Bond 4.1% falseREITs 33.2% falseIntl SC 29.3% falseEM 25.6% falseFor Dev 20.4% falseUS SC 18.3% falseDiv Port 13.0% falseUS HYB 11.1% falseUS LC 10.9% falseAlts 9.0% falseMunis 4.5% falseIG Bond 4.3% falseEM 34.0% falseIntl SC 22.6% falseFor Dev 14.5% falseREITs 13.8% falseAlts 9.3% falseDiv Port 7.9% falseUS LC 4.9% falseUS SC 4.6% falseMunis 3.5% falseUS HYB 2.7% falseIG Bond 2.4% falseREITs 36.0% falseEM 32.1% falseIntl SC 26.9% falseFor Dev 25.7% falseUS SC 18.4% falseUS LC 15.8% falseDiv Port 15.1% falseAlts 12.9% falseUS HYB 11.8% falseMunis 4.8% falseIG Bond 4.3% falseEM 39.4% falseFor Dev 12.4% falseIntl SC 10.8% falseAlts 10.0% falseIG Bond 7.0% falseDiv Port 6.7% falseUS LC 5.5% falseMunis 3.4% falseUS HYB 1.9% falseUS SC -1.6% falseREITs -17.6% falseIG Bond 5.2% falseMunis -2.5% falseAlts -19.0% falseDiv Port -23.1% falseUS HYB -26.2% falseUS SC -33.8% falseUS LC -37.0% falseREITs -39.2% falseFor Dev -43.6% falseIntl SC -50.2% falseEM -53.3% falseEM 78.5% falseIntl SC 62.9% falseUS HYB 58.2% falseFor Dev 33.7% falseREITs 28.5% falseUS SC 27.2% falseUS LC 26.5% falseDiv Port 26.2% falseAlts 20.0% falseMunis 12.9% falseIG Bond 5.9% falseREITs 28.1% falseUS SC 26.9% falseIntl SC 25.2% falseEM 18.9% falseUS HYB 15.1% falseUS LC 15.1% falseDiv Port 13.6% falseAlts 10.2% falseFor Dev 8.9% falseIG Bond 6.5% falseMunis 2.4% falseMunis 10.7% falseREITs 9.4% falseIG Bond 7.8% falseUS HYB 5.0% falseUS LC 2.1% falseDiv Port 0.3% falseUS SC -4.2% falseAlts -5.3% falseFor Dev -12.2% falseEM -18.4% falseIntl SC -18.5% falseIntl SC 18.5% falseEM 18.2% falseREITs 17.1% falseFor Dev 16.4% falseUS SC 16.4% falseUS LC 16.0% falseUS HYB 15.8% falseDiv Port 11.9% falseMunis 6.8% falseAlts 6.4% falseIG Bond 4.2% falseUS SC 38.8% falseUS LC 32.4% falseFor Dev 21.0% falseIntl SC 19.7% falseDiv Port 13.5% falseAlts 9.1% falseUS HYB 7.4% falseREITs 1.2% falseIG Bond -2.0% falseMunis -2.6% falseEM -2.6% falseREITs 32.0% falseUS LC 13.7% falseMunis 9.1% falseDiv Port 6.6% falseIG Bond 6.0% falseUS SC 4.9% falseAlts 3.0% falseUS HYB 2.5% falseEM -2.2% falseIntl SC -4.0% falseFor Dev -4.3% falseREITs 4.5% falseMunis 3.3% falseIntl SC 2.6% falseUS LC 1.4% falseIG Bond 0.5% falseDiv Port -0.8% falseAlts -1.1% falseFor Dev -3.0% falseUS SC -4.4% falseUS HYB -4.5% falseEM -14.9% falseUS SC 21.3% falseUS HYB 17.1% falseUS LC 12.0% falseEM 11.2% falseDiv Port 7.8% falseREITs 6.7% falseAlts 5.4% falseIntl SC 3.9% falseFor Dev 2.8% falseIG Bond 2.6% falseMunis 0.2% falseEM 37.3% falseIntl SC 31.6% falseFor Dev 24.2% falseUS LC 21.8% falseUS SC 14.6% falseDiv Port 14.0% falseAlts 8.6% falseUS HYB 7.5% falseMunis 5.4% falseREITs 3.8% falseIG Bond 3.5% falseMunis 1.3% falseIG Bond 0.0% falseUS HYB -2.1% falseREITs -4.2% falseUS LC -4.4% falseAlts -4.7% falseDiv Port -5.5% falseUS SC -11.0% falseFor Dev -14.1% falseEM -14.6% falseIntl SC -18.2% falseUS LC 31.5% falseUS SC 25.5% falseREITs 23.1% falseFor Dev 22.5% falseIntl SC 22.4% falseDiv Port 18.5% falseEM 18.4% falseUS HYB 14.3% falseAlts 10.4% falseIG Bond 8.7% falseMunis 7.5% falseUS SC 20.0% falseUS LC 18.4% falseEM 18.3% falseIntl SC 14.2% falseAlts 11.6% falseDiv Port 11.0% falseFor Dev 7.6% falseIG Bond 7.5% falseUS HYB 7.1% falseMunis 5.2% falseREITs -11.2% falseREITs 45.9% falseUS LC 28.7% falseUS SC 14.8% falseIntl SC 12.9% falseFor Dev 12.6% falseDiv Port 11.7% falseAlts 10.3% falseUS HYB 5.3% falseMunis 1.5% falseIG Bond -1.5% falseEM -2.5% falseAlts -4.2% falseMunis -8.5% falseUS HYB -11.2% falseIG Bond -13.0% falseFor Dev -14.3% falseDiv Port -15.5% falseUS LC -18.1% falseIntl SC -20.0% falseEM -20.1% falseUS SC -20.4% falseREITs -26.0% falseUS LC 26.3% falseFor Dev 17.9% falseUS SC 16.9% falseIntl SC 15.7% falseREITs 14.0% falseDiv Port 13.7% falseUS HYB 13.4% falseEM 9.8% falseAlts 7.5% falseMunis 6.4% falseIG Bond 5.5% falseUS LC 15.3% falseEM 7.5% falseAlts 5.0% falseFor Dev 5.0% falseDiv Port 4.4% falseIntl SC 2.8% falseUS HYB 2.6% falseUS SC 1.7% falseMunis -0.4% falseREITs -0.6% falseIG Bond -0.7% 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: Bloomberg, Dow Jones, FactSet, MSCI Russell, Standard & Poor’s as of June 30, 2023. 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. Diversified Portfolio Investment Grade Bonds30%U.S. Large Cap Equity (US LC)20%U.S. Small Cap Equity (US SC)10%Foreign Developed Equity (For Dev)10%Municipals (Munis)5%U.S. High Yield Bonds (US HYB)5%International Small Cap (Int SC)5%Emerging Markets (EM)5%U.S. Real Estate (REITs)5%Alternatives (Alts)5% The indices are unmanaged, are not available for investment, and do not incur expenses. Click here for representative indices and definitions Diversification does not guarantee a profit or protect against a loss in declining markets. 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. High-yield bonds (also known as “junk bonds’) are subject to additional risks such as the risk of default. Factors unique to the municipal bond market may negatively affect the value in municipal bonds. 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. Market prices of investments may fall rapidly or unpredictably due to a variety of economic or political factors, market conditions, disasters or public health issues, or in response to events that affect particular industries or 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. Any discrepancies between the totals and sum of individual allocations are due to rounding. The CBOE Volatility Index (VIX) is a measure of expected price fluctuations in the S&P 500 Index options over the next 30 days. The Bloomberg U.S. Corporate High Yield Bond Index (Representing U.S. High Yield Bonds) is a total return performance benchmark for fixed income securities having a maximum quality rating of Ba1 (as determined by Moody’s Investors Service). Bloomberg U.S. Aggregate Bond Index (representing Investment Grade Bonds): The Bloomberg U.S. Aggregate Bond Index is an index of the U.S. investment-grade fixed-rate bond market, including both government and corporate bonds. The Bloomberg U.S. Municipal Bond Index (representing Muni Bonds) is a broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed tax exempt bond market. The index includes state and local general obligation, revenue, insured, and pre-refunded bonds. The HFRI Fund Weighted Composite Index (representing Alternatives) is a global, equal-weighted index of over 2,000 single-manager funds that report to HFR Database. Constituent funds report monthly net of all fees performance in U.S. dollars and have a minimum of $50 million under management or a twelve (12) month track record of active performance. The HFRI Fund Weighted Composite Index does not include funds of hedge funds. MSCI World Index ex USA (representing Foreign Developed Equity): The MSCI World ex USA Index captures large and mid cap representation across 22 of 23 developed markets countries—excluding the United States. With 1,021 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. The MSCI Emerging Markets Index (representing Emerging Markets) is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. Please go to msci.com for the most current list of countries represented by the index. The MSCI ACWI ex USA Small Cap Index (representing International Small Cap) is a free float-adjusted market capitalization weighted index that is designed to measure the small capitalization equity market performance of certain developed (excluding the U.S.) and emerging markets. Please go to msci.com for the most current list of countries represented by the index. The Russell 2000® Index (representing U.S. Small Cap Equity) measures the performance of approximately 2,000 small-cap companies in the Russell 3000® Index, which is made up of 3,000 of the biggest U.S. stocks. The Russell 2000® serves as a benchmark for small-cap stocks in the United States. Please go to msci.com for the most current list of countries represented by the index. The Dow Jones U.S. Select REIT Index (representing U.S. Real Estate) tracks the performance of publicly traded real estate investment trusts (REITs) and REIT-like securities and is designed to serve as a proxy for direct real estate investment, in part by excluding companies whose performance may be driven by factors other than the value of real estate. The S&P 500® Index (representing U.S. Large Cap Equity) is a capitalization-weighted index of 500 stocks. The S&P 500® Index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The S&P 500® Index is proprietary data of Standard & Poor’s, a division of McGraw-Hill Companies, Inc. All rights reserved. The indices are unmanaged, are not available for investment, and do not incur expenses. Please note that these Diversified Portfolios are not investable products and the performance information of the Diversified Portfolios shown are not those of any AMG funds, strategies or other investment products. AMG Distributors, Inc., a member of FINRA/SIPC. Get the Latest Download the Latest Our complete guide for investment success Order Your Print Copy Order Now Contact Us Advisor Line: 800.368.4410 Questions: clientservice@amg.com
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