Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

DESPITE the great uncertainty we’ve seen this year, 2021 has been a bumper year for many investors.

That’s borne out in new analysis from Fidelity which rounds up returns from various asset classes in the calendar year. The analysis runs from 1 January 2021 until 30 November - so the December numbers are not included - but the trend is clear, nonetheless.

What jumps out looking at the numbers is the strong showing of multiple asset classes, with only three in negative territory in the latest period and several returning a plus 10% gain.

It’s a reminder that the economic cost of the pandemic has not translated into losses for investors - far from it. Those fortunate enough to own assets are likely to have enjoyed strong gains in both years of the pandemic, despite the chaos going on in the wider economy.

We’ve reproduced the results in the colourful table below. The results for 2021 are in the far-right column, with each coloured tab corresponding to an asset classes listed in the far-left column. Please be aware that past performance is not a reliable guide indicator of future returns.

How each asset class has performed over the past ten years up to 30/11/2021:

None

Source: Refinitiv, total returns in GBP, December 2021. Commodities (Bloomberg Commodity),  Corporate Bonds (ICE BofA Global Corporates) Government Bonds (ICE BofA Global Government Index), High Yield Bonds (ICE BofA Global High Yield), Japanese Equities (MSCI Japan), Asia Pacific Equities (MSCI Asia Pacific ex Japan), European Equities (MSCI Europe ex UK), Emerging Markets Equities (MSCI Emerging Markets), US Equities (S&P 500), Cash (ICE BofA British Pound 3m) Real Estate (FTSE EPRA Nareit), Emerging Market Debt (JPM EMBI Global Diversified),  Inflation-Linked Bonds (ICE BofA Global Inflation-Linked Government), Global Equities (MSCI World), UK Equities (FTSE All-Share).

Once again, US stocks have performed well and rose 27.28% in the calendar year. That follows a third place in 2020 and strong showing in many of the previous ten years. That’s significant not only because it shows the strength and consistency of the companies in the US, but because the American market makes up such a large part of the global stock market overall. Any investor with a properly spread mix of assets is likely to hold a large weighting to the US, including anyone tracking markets via passive index funds.

For many years now the strength of returns in the US has been built on the success of its giant tech companies. This time, however, those have been supported by strong showings in sectors such as pharmaceuticals. The past year has been another when betting against the world’s largest market would have been a mistake.

UK shares, meanwhile, have disappointed, posting a 0.88% loss in the period, while the Asia-Pacific region has lost 1.32%. These were the only regional stock markets that were in negative territory.

Another takeaway is that commodities and Real Estate were the second and third best performing assets respectively. Both are considered alternatives to the larger stock and bond markets and are used as diversifiers in many portfolios.

Bonds, meanwhile, have struggled to produce any kind of positive return this year. It is evidence that investors may need to look to alternatives as well as traditional asset classes to diversify their investments in the current environment.

As we head into a new year, the results from 2021 show that returns can come from anywhere, even if some markets have shown strong recent consistency. Moreover, they show that risk assets have been the place to be even as great uncertainty pervades in other areas of the economy. In 2022 you can add rampant inflation, tightening monetary policy and a host of geopolitical concerns into the mix of factors to worry investors - but the smart ones will be holding their nerve as it plays out.

Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates.  Investments in emerging markets can be more volatile than other more developed markets. Please be aware that past performance is not a reliable guide indicator of future returns. There is a risk that the issuers of bonds may not be able to repay the money they have borrowed or make interest payments. When interest rates rise, bonds may fall in value. Rising interest rates may cause the value of your investment to fall. Funds in the property sector invest in property and land. These can be difficult to sell so you may not be able to sell/cash in this investment when you want to. There may be a delay in acting on your instructions to sell your investment. The value of property is generally a matter of a valuer's opinion rather than fact. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.

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