Real estate continues run in first quarter
Alternative asset classes outperformed most bond and equity classes in the first quarter of 2007.
A summary of asset returns in the first quarter of 2007 shows that real estate, which has been a hot performer for the past two years, continued to deliver, while alternative assets in general beat most traditional bond or equity categories.
Pimco compiled 1Q07 index returns to compare a broad range of asset classes.
The DJ Wilshire Reit Index, a proxy for real-estate investments, returned 36.1% in 2006, making it last year's best-performing asset class. The first quarter has seen it return another 3.6%.
Commodities, after a dismal 2006 (just 2.1%), have rebounded strongly in Q1, with a 4.6% return on the DJAIG Commodities Index. And hedge funds also are performing well, with the CSFB/Tremong Hedge Fund Index up 3.3% this year. Multi-strategy hedge funds are up 5.6% and event-driven funds are up 5.0%, making them the two best performers of any asset class index compiled by Pimco. The only strategy losing money this year so far is managed futures, down -4.7%.
Data for private equity and venture capital were reported with a three-month lag, but both performed well in 2006, returning 27% and 17% respectively.
Alternatives outperformed bonds in the first quarter. In fixed income, US Treasury Inflation-Protected Securities returned 2.5%, and the Merrill Lynch High Yield Index returned 2.7%. High yield was the best performer for fixed income last year, clocking an 11.6% gain for 2006. But overall fixed income is delivering mediocre returns, with the Lehman Aggregate up only 1.5% year to date. Bonds, however, are outperforming cash: the Citigroup three-month T-bill index rose only 1.2% in the first quarter.
Equities have been mixed. Some categories are among the strongest performers so far this year, namely US mid-cap value stocks and German equities. But US large cap stocks were beaten by bonds, and emerging-market and Japanese equities were mediocre or poor performers.
The top-performing asset class in Q1, beyond niche hedge-fund categories, was the Russell Mid-Cap Value Index, which has returned 4.9% to date. The German DAX has returned 4.9%. The hottest equity class last year, emerging markets (32.2% in 2006), have had an indifferent 2007, returning a mere 1.8%. Other strong areas from 2006, including large-cap value and small-cap value, have also had a rough start this year.
But the two worst-performing asset classes, aside from managed futures, are US large-cap equities (up 0.6% in Q1) and Japanese equities (up 0.4%). US large caps had a decent year in 2006 (returning 15.8%), but Japan disappointed last year. It appears that the lack of domestic consumption continues to bedevil the outlook for stock markets in the Land of the Rising Sun.
Pimco compiled 1Q07 index returns to compare a broad range of asset classes.
The DJ Wilshire Reit Index, a proxy for real-estate investments, returned 36.1% in 2006, making it last year's best-performing asset class. The first quarter has seen it return another 3.6%.
Commodities, after a dismal 2006 (just 2.1%), have rebounded strongly in Q1, with a 4.6% return on the DJAIG Commodities Index. And hedge funds also are performing well, with the CSFB/Tremong Hedge Fund Index up 3.3% this year. Multi-strategy hedge funds are up 5.6% and event-driven funds are up 5.0%, making them the two best performers of any asset class index compiled by Pimco. The only strategy losing money this year so far is managed futures, down -4.7%.
Data for private equity and venture capital were reported with a three-month lag, but both performed well in 2006, returning 27% and 17% respectively.
Alternatives outperformed bonds in the first quarter. In fixed income, US Treasury Inflation-Protected Securities returned 2.5%, and the Merrill Lynch High Yield Index returned 2.7%. High yield was the best performer for fixed income last year, clocking an 11.6% gain for 2006. But overall fixed income is delivering mediocre returns, with the Lehman Aggregate up only 1.5% year to date. Bonds, however, are outperforming cash: the Citigroup three-month T-bill index rose only 1.2% in the first quarter.
Equities have been mixed. Some categories are among the strongest performers so far this year, namely US mid-cap value stocks and German equities. But US large cap stocks were beaten by bonds, and emerging-market and Japanese equities were mediocre or poor performers.
The top-performing asset class in Q1, beyond niche hedge-fund categories, was the Russell Mid-Cap Value Index, which has returned 4.9% to date. The German DAX has returned 4.9%. The hottest equity class last year, emerging markets (32.2% in 2006), have had an indifferent 2007, returning a mere 1.8%. Other strong areas from 2006, including large-cap value and small-cap value, have also had a rough start this year.
But the two worst-performing asset classes, aside from managed futures, are US large-cap equities (up 0.6% in Q1) and Japanese equities (up 0.4%). US large caps had a decent year in 2006 (returning 15.8%), but Japan disappointed last year. It appears that the lack of domestic consumption continues to bedevil the outlook for stock markets in the Land of the Rising Sun.
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