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Both stocks and bonds had strong gains in 2019, leading to the strongest return in decades for balanced investors.
Strongest Return in Over Two Decades Main Despite a number of uncertainties coming into the year, 2019 proved to be an exceptionally strong year for both equity and fixed income markets, with the S&P 500 up 31.5%, the MSCI EAFE up 22%, and the Bloomberg Barclays U.S. Agg up 8.7%. Combined, the three indexes provided a return of 18.7%, the highest return for a balanced portfolio since 1995. So let's look back at the factors that played into those returns.

Fixed income returns were supported by the Fed's pivot toward trimming its short-term policy rates in response to slowing economic growth, falling inflation expectations, and global uncertainty. Long-term rates had already been driven lower by investors seeking shelter against those risks. Combined, these factors resulted in lower interest rates, which in turn, boosted bond returns.

Equities, fresh off of a notable market correction in late 2018, were supported by reasonable valuations and positive momentum when that correction appeared to be overdone. The Fed's accommodative shift, a healthy consumer sector that acted as the primary engine for economic growth, and continued corporate earnings growth helped to carry equities higher throughout the course of the year.

While 2019 returns may be difficult to replicate, we believe both equities and fixed income are still positioned to add positive returns in the coming year, as the economy forms a solid base heading into 2020.
Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.

Data sources for peer group comparisons, returns, and standard statistical data are provided by the sources referenced and are based on data obtained from recognized statistical services or other sources believed to be reliable. However, some or all of the information has not been verified prior to the analysis, and we do not make any representations as to its accuracy or completeness. Any analysis nonfactual in nature constitutes only current opinions, which are subject to change. Benchmarks or indices are included for information purposes only to reflect the current market environment; no index is a directly tradable investment. There may be instances when consultant opinions regarding any fundamental or quantitative analysis may not agree.

Plante Moran Financial Advisors (PMFA) publishes this update to convey general information about market conditions and not for the purpose of providing investment advice. Investment in any of the companies or sectors mentioned herein may not be appropriate for you. You should consult a representative from PMFA for investment advice regarding your own situation.