It has been a very good year for stocks with large company stocks up 22% through September 30. A broad bond portfolio was up about 4.6% year to date. Real estate did very well this quarter resulting in a year-to-date return of about 13.5%. Commodities saw a modest return of 1% year to date.
Let’s drill down into different types of investments. The table below shows returns for investable ETFs representing the most common investment types. We like to use ETFs versus indices to evaluate returns as they include transaction cost and fees while indices do not. In this update we will examine the performance of each major investment type through the end of September 2024.
Stocks
Large company U.S. stocks were up substantially for the quarter and year to date. Large cap stocks had a 22% return year to date. Technology stocks lagged this quarter but maintained a 19.7% year to date return. Value ETFs, such as VTV, outperformed large stocks and tech stocks this quarter but lagged broad large cap stocks with a return of 18.9% year to date
International stocks also outperformed large US stock this quarter but lagged US stocks year to date with a return of 12.4%. Small company stocks outperformed large stocks for the quarter and are now up 11% year to date.
Overall, a very strong quarter and year to date performance for stocks this year.
Bonds
The bond market overall was up 4.6% year to date. The sweet spot in bonds is 4 month T-bills currently but rates are starting to come down.
Alternative Investments
Alternative investments can include real estate, commodities, private capital, and a variety of other investments. Here we include two traded ETFs representing real estate (VNQ) and commodities (DBC). Real estate was up substantially this quarter and now has a year to date return of 13.5%. Commodities were down for the quarter and up only 1% year to date, consistent with the decline in inflation.
Diversified Portfolios
There are some iShares ETFS representing different levels of diversification from about 40% stocks and 60% bonds to 80% stocks and 20% bonds. Most diversified investors have portfolios with between 60% and 80% stocks depending on their ability and willingness to take risk. These diversified portfolios were all up year to date with returns from about 8.8% for a 40% stock portfolio to about 15.4% for an 80% stock portfolio.
Looking Forward
Thus far the Federal Open Market Committee has managed to slow the economy down by raising interest rates without pushing the economy into a recession. Risk remains that they could keep rates high for too long or that other events might cause a U.S. or global recession. Overall stocks are still priced at a high level relative to history. I would therefore expect more modest stock returns over the remainder of this year even though the Fed has started to lower rates.