Barings said the key drivers for North American equities to reach the number one position have been continued economic growth with good employment data, stronger retail sales, a recovery in house prices and improvement in consumer confidence.
The data show that North American equities as an asset class produced 28.3% in total returns for the year to 31 December 2013, European equities returned 25.2%, Japanese equities returned 24.9% and UK equities 20.8%.
The poorest performing asset classes in 2013 were UK gilts which lost 3.9% overall, emerging market equities which lost 4.1%, overseas bonds which fell 6.4% and gold bullion which fell 28.7%
“Returns in both North America and Europe in 2013 were boosted by investors being prepared to pay higher multiples for the given level of earnings,” said Andrew Cole, manager of the Baring multi asset fund. “They have been prepared to do this as confidence about the economic outlook on both sides of the Atlantic improved even though actual earnings for 2013 were constantly revised lower,” he added.
Cole also said Barings expects developed economies to grow at or above trend in 2014. Equities remain his preference this year with performance expected to better than other asset classes again, although not at the same levels as 2013.
The research also shows that volatility from one year to the next persists in a number of major asset classes, with many of the best and worst performing classes changing dramatically year to year.
Examples of this in the data include emerging market equities which was the third best asset class for the year to 31 December 2012 with total returns of 13.4% but was third worst in 2013 with the 4.1% loss.
European equities have been another instance of this as in 2011 it lost 15.2% as a class overall then leapt to being the top performing asset class in 2012 with returns of 17.8% overall. Gold bullion also went from the top part of the list to the bottom between 2011 and 2012, the data show.
Barings argues that this shows why multi-asset investing with an unrestricted mandate has found favour with investors looking to achieve targeted returns with less volatility than pure equities funds.
