Basic statistical analysis of historical asset returns can reveal the growth rate of wealth invested in an asset class or portfolio and the riskiness or volatility of asset classes.
Measuring Long-Term Market Performance
Compound Annual Return — The compound annual return is measured by geometric mean. It measures the average performance of an asset or portfolio over a given time period. In other words, it is a backward-looking statistic that determines the change in wealth over more than one period.
Arithmetic Mean — The arithmetic mean is just the simple average of returns. This measure of average better represents typical performance over single periods.
Risk — Risk is measured by standard deviation. It measures the fluctuation of returns around the arithmetic average return of the investment. The higher the standard deviation, the greater the variability (and thus risk) of the investment returns.
Types of Asset Classes
Stocks
- Large Stocks
- Small Stocks
- International Stocks
Bonds
- Government Bonds
- Corporate Bonds
- Municipal Bonds
- High-yield Bonds
- International Bonds
Cash Equivalents
- Money Market Funds
- Treasury Bills
- Certificates of Deposit
Hard Assets
- Real Estate
- Commodities
- Gold
In 2002, Equitas Capital Advisors, LLC was established as a unique company that blends the resources of a large global corporation with the flexibility of a small boutique firm. The registered service mark of Equitas Capital Advisors is Engineering Financial Solutions® and the purpose of Equitas is to design, build, and deliver investment solutions to meet the goals and objectives of our investors. Equitas Capital Advisors, LLC, located in New Orleans, has over 200 years of combined investment management consulting experience providing professional investment management services to investors such as foundations, endowments, insurance companies, oil companies, universities, corporate retirement plans, and high-net-worth family offices.
Disclosures & Disclaimers
Above information is for illustrative purposes only and has been obtained from reliable sources but no guarantee is made with regard to accuracy or completeness. This information, including any specific securities mentioned, is for educational and illustrative purposes only and not a recommendation or solicitation to purchase or sell any individual security. You cannot invest directly in an index.
Equitas Capital Advisors, LLC is registered as an investment advisor with the U.S. Securities and Exchange Commission (“SEC”) and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability.
Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author on the date of publication and are subject to change. This publication does not involve the rendering of personalized investment advice.
Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance levels. All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions or withdrawals, and economic conditions may materially alter the performance of your portfolio. Charts and references to returns do not represent the performance achieved by Equitas Capital Advisors, LLC, or any of its clients.
Asset allocation and diversification do not assure or guarantee better performance and cannot eliminate the risk of investment losses. There can be no assurances that an investor’s portfolio will match or outperform any particular benchmark.