The Case for Bonds: Chart

Fixed income is an important asset class to own in a well diversified portfolio. Though bonds do not offer the thrill of stocks and potential high returns, they provide stability and earn a decent income during good times and bad. For instance, in a prolonged bear market for equities even dividends can get suspended or reduced. Bonds will provide a consistent source of income during such periods without interruptions. When equity markets become volatile investors try to seek shelter in bonds and other relatively safe assets. The following chart from PIMCO shows the diversification benefits of owing bonds:

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Source: PIMCO

Related ETFs:

  • iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD)
  • iShares TIPS Bond ETF (TIP)
  • Vanguard Total Bond Market ETF (BND)
  • iShares Core Total U.S. Bond Market ETF (HYG)
  • SPDR® Barclays High Yield Bond ETF (JNK)

Disclosure: No positions

The Periodic Table of Commodity Returns 2021: Chart

Commodities had one of the best years last year in recent history. The dramatic recovery in crude oil prices led to crude ending the year with a 55% gain. Natural gas was up about 47%. The best performing commodity was coal with a return of over 160%. Despite the rising popularity of renewables coal is still the king in some countries including Germany. Gold ended the year with a loss of about 4%.

The following chart shows the annual returns of select commodities from 2012 to 2021:

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Source: U.S. Global Investors

For an interactive version of the above chart go here.

The Top Three Producers of Clean Energy Metals

The world is transitioning to clean energy at a rapid pace. Many countries are planning to reduce their carbon footprint. As the transition to a newer world gains traction the demand for clean energy commodities would go up. The traditional fossil fuel-based automobiles are increasingly replaced by electric vehicles. Coal powered electric power plants are getting shutdown and replaced by renewable energy produced from sources such as solar or wind. The commodities needed for the transition to clean energy are concentrated in a handful of countries.

The chart below shows the top three producers of clean energy metals – Copper, Nickel, Cobalt, Rare Earths and Lithium.  Chile is the world’s largest copper producer but the country just recently elected a leftist leader. Similarly the Democratic Republic of Congo is the top producer for cobalt. Australia is a top lithium producer but 70% of the world’s Lithium reserves are found in the Lithium Triangle formed in an area at the intersection of Chile, Bolivia and Argentina.

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Source: 2021 IN CHARTS, Mirabaud Asset Management

Developed Markets Annual Returns By Country From 2007 To 2021: Chart

International stocks offer investors the benefit of diversification and also the potential to boost returns. US investors looking to diversify can easily add other developed market equities. For instance most of Western Europe have excellent firms that are equally good if not better than their American peers. Moreover many of the large cap companies trade on the US markets as well. So it is a wise strategy to not only own US stocks but also add a bunch of developed market equities to a portfolio. From a global energy giant based in the UK to a chemical maker in Germany and and railroads in Canada the universe of investment choices available is huge.

The chart below shows the annual total returns of developed market country returns from 2007 to 2021 based on the MSCI index for each country:

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Note: Returns shown above are based on the respective MSCI Index Total Annual Returns (includes dividend reinvestment) in US Dollar terms.

Source: Novel Investor

Last year Austria was the best performer with a total return of over 42% followed by the Netherlands and Canada. Canada was boosted by the strong recovery in energy prices in 2021. These returns are comparable to the returns of the S&P 500 which had a total return of 28% last year.

Related ETFs:

  • iShares MSCI Germany Index Fund (EWG)
  • iShares MSCI Canada Index Fund (EWC)
  • iShares MSCI Australia Index Fund (EWA)
  • iShares MSCI United Kingdom Index (EWU)
  • iShares MSCI Singapore Index (EWS)

Disclosure: No positions