Which Investment Calls Came Good Last Year?

(January 17, 2014) — “A good stiff wind” was at the back of risk assets in 2013, according to consulting firm Segal Rogercasey, rather than the projected “modest breeze” amid low inflation and interest rates for stability.

The firm had expected the US equity market to perform well last year—the S&P 500 rose 32.4%—and outperform non-US equities: The MSCI Europe, Australasia, and Far East index returned 23.3% for the year.

Segal Rogercasey had been overly optimistic of emerging markets, initially stating that volatility would not continue throughout the year in the long term. However, the MSCI EME index lost 2.3% in 2013, and emerging markets faced significant outflows due to the US Federal Reserve’s talk of tapering.

The report found the consulting firm accurately projected US core fixed-income to be “an unattractive place to be in 2013.” The Barclays Aggregate Index lost 2% in 2013.

High-yield fixed income proved to be well-performing, according to Segal Rogercasey, with the Barclays High Yield Index returning 7.4% for the year.

Emerging market debt disappointed investors last year despite high hopes for the asset class.

“Our expectations on the emerging markets in general were not met, although we continue to caution about the difficulty of dealing with the volatility of this investment class and suggest active management is important to operate within what is no longer a homogenous opportunity set,” said Tim Barron, Segal Rogercasey’s CIO.

Although one-year returns of alternative investments are difficult to benchmark, the firm said it incorrectly predicted global macro to be a leading sub asset class as systematic managers faced challenges throughout the year. 

Commodities underperformed in 2013, the firm said, while master limited partnerships in energy were well-rewarded.

Related content: The Year in Risk: Developed and Emerging Markets Diverge