Past, present and future

At the start of each year the question on many investors’ lips is "which area will perform the best over the coming year?" Making such a prediction can encourage investors to allocate a large amount to one area at the expense of others. To mitigate risk it is important not to commit too heavily to any one sector or area.

Below you can view a table showing the annual returns from each of the main sectors over the last 10 years. Emerging markets have generally performed extremely well, however they fell heavily in 2008 and 2011. Conversely corporate bonds, which were fairly lacklustre for much of the last decade, have enjoyed a better run in recent years.

Click on the image above to view past performance of the sectors

What this teaches us is that investors should consider exposure to all the main sectors. They should avoid the temptation to invest heavily in areas which have enjoyed a recent good run; while there may be further to go you could end up buying at just the wrong time. Having a well-diversified portfolio is key to managing risk, and achieving long-term investment success.

The Wealth 150 contains all our favourite funds in the main sectors and is designed for people who like to choose their own funds, without personal advice. It is the product of rigorous mathematical analysis, combined with thousands of hours of interviews with leading fund managers, to ensure we only bring the very best funds to our clients' attention.

See the funds on the Wealth 150

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Please remember past performance is not a guide to future returns. Source: Lipper IM, total return, to 31/12/12.