What were the performances of the different asset classes in the first half of 2021?


The Covid-19 pandemic is far from over, but 2021 has been a surprisingly good year for investors, continuing the recovery from last year.

Billions of dollars in global stimulus and hopes of a post-lockdown spending spree have propelled stock prices to new highs as the US stock market continues its seemingly endless bull run.

Virtually every global stock market has benefited, but other asset classes have lagged, including cryptocurrencies, gold, and bonds.

United States

The US stock market has dominated the world for more than a decade and its run continued this year. The S&P 500 index of major stocks has returned 336% in the past decade and an additional 14% in the first six months of 2021.

Last summer, iPhone maker Apple became the world’s largest $ 2 trillion company, and in June Microsoft joined it. Amazon isn’t far off at $ 1.85 billion, while Google owner Alphabet is valued at $ 1.71 billion. Facebook has just joined the Club Trillion.

The fireworks could continue, said Darius McDermott, Managing Director of FundCalibre. “By value, the US market represents about half of all listed companies in the world and they are among the most dynamic and innovative. “

If President Joe Biden’s $ 1 billion infrastructure spending bill passes, the country will spend an additional $ 1 billion (£ 730 billion) to upgrade roads, bridges, rail networks, broadband and turbocharged water pipes and growth.

The only time they [valuations] were more expensive was at the height of the dot-com bubble

Jason Hollands, Managing Director of Bestinvest

One of the concerns is that valuations are expensive, says Jason Hollands, managing director of the investment platform Bestinvest. “The only time they were more expensive was during the height of the dot-com bubble.”

Inflation is another concern, as consumer price growth reached 5% in the year through May and is expected to rise, which could force the US Federal Reserve to raise interest rates for stop the overheating economy.

Investors ignore the US market at their peril, says Hollands.

“Companies listed in the United States represent 58% of the MSCI AC World Index, with Japan ranking second at just 6%, China third at 4.9% and the United Kingdom fourth at 3.9%”, he adds.

Outlook: The US remains the only one to beat, but don’t get carried away as it seems expensive and competing stock markets might start to catch up.

Great Britain

After more than five years of slump, largely due to the uncertainty of Brexit, the UK is starting to catch up.

The FTSE 100 index of Britain’s best blue chips has risen 10.9% so far this year, despite a strained relationship with the EU and the rapidly spreading Covid-19 Delta variant.

Yet the country has been bolstered by the success of its vaccines, with more than 45.4 million people receiving at least one vaccine.

Foreign investors have taken note and are tempted by favorable valuations after years of underperformance.

“While the S&P 500 is trading at 21.2 times expected corporate earnings for next year, UK firms are significantly cheaper at just 13.7 times expected earnings,” Hollands said.

By value, the US market represents about half of all listed companies in the world

Darius McDermott, Managing Director of FundCalibre

Cash-rich overseas bargain hunters are lining up to come up with competing offers for dumped UK companies run by US equity funds.

The country’s fourth-largest supermarket chain, Morrisons, has attracted offers from three US private equity funds. Mining, healthcare and consumer goods companies are also prime targets.

Foreign investors now own two-thirds of listed stocks in the UK, according to a study by Orient Capital, with US, European and Chinese multinationals leading the way.

UK small businesses have done even better than blue chips, with the FTSE Small Cap index up 19.4% so far this year.

Outlook: Brexit may not have been a resounding success, but it hasn’t been a real disaster either. At least the argument is largely settled and it allows investors to focus on financial matters rather than politics. UK is cheap. Hopefully the Covid-19 Delta variant doesn’t put it back in lockdown.


Europe may have its political and economic worries, but its stock market continues to challenge skeptics.

The MSCI Europe Index (excluding UK) is up 12.3% year-to-date, and Ben Ritchie, head of European equities at Aberdeen Standard Investments, believes there could be more to to come.

“European companies are well positioned to lead green technologies, are exposed to rapidly growing emerging markets and excellent intellectual property accumulated over decades,” he said.

Europe is a leader in consumer brands, pharmaceuticals, luxury goods and industrial technology, according to Mr. Ritchie.

The economic outlook and liquidity conditions are better than elsewhere [in Europe], while stock valuations are reasonable

Luca Paolini, Chief Strategist at Pictet Asset Management

The danger is that he may struggle to repeat his solid first half. “Expectations for profits and economic growth are also high,” he adds.

Focusing on Europe, Luca Paolini, chief strategist at Pictet Asset Management, said: “The economic outlook and liquidity conditions are better than elsewhere, while stock valuations are reasonable.

Outlook: The European market ignored Brexit and euro concerns to once again reward shareholders. Not to be underestimated.

Emerging Asia and China

Emerging Asian markets have underperformed this year, with the MSCI AC Asia-Pacific (excluding Japan) index rising a modest 5.7%, but Paolini says the region remains attractive.

“It is expected to grow twice as fast as the rest of the world over the next five years, with a lower inflation rate,” he says.

Asia’s relatively conservative monetary and fiscal response to the Covid-19 crisis means the region’s economies have more policy space, he adds.

Many investors are underexposed to Asia despite improving growth prospects, low inflation, commitment to reform and an increasingly diversified economy.

Investors cannot afford to ignore this part of the world, says Paolini.

“We expect emerging Asian equities to be the best performing asset class over the next five years, with average returns of around 11% per annum. Vietnam and India should do particularly well, ”he said.

Outlook: Asia still appears to be a strong long-term bet. Make sure you have some exposure in your portfolio.


Gold lost its luster in 2021. It started the year at $ 1,930, below its all-time high of $ 2,084 reached last August. Today, it stands at $ 1,805, a decrease of 6.5%.

The global economic recovery has affected demand for safe haven, said Laith Khalaf, financial analyst at AJ Bell.

“Inflation fears haven’t helped, as higher interest rates will increase savings rates and bond yields, while gold pays no interest,” Mr. Bell said.

This could offer a buying opportunity as gold now appears to be “massively undervalued,” according to Fawad Razaqzada, market analyst at ThinkMarkets. “In addition, the precious metal is doing well historically in the third quarter. “

Outlook: Gold may regain some of its lost luster, but investors may need to be patient.

Bitcoin and cryptocurrencies

It has been another crazy year for cryptocurrencies. Bitcoin started trading in 2021 at $ 29,388, more than doubled to $ 63,588 in mid-April, and then collapsed in half. As of this writing, it hovers around $ 33,000, squeezed by a Chinese crackdown and the unpredictability of Elon Musk’s Twitter exit.

Bitcoin also holds two dirty secrets. Alt-coin mining now uses an amount of electricity similar to that of Argentina or the Netherlands, exacerbating climate change, while criminals use it to hide ill-gotten gains or to ransom them. companies.

Crypto is at a crossroads, says Razaqzada. “The longer we go without the price hitting $ 40,000, the more likely the support will collapse and give way to a sharp move towards $ 20,000.”

The longer we go without the price hitting $ 40,000, the more likely the support will collapse and give way to a sharp move towards $ 20,000.

Fawad Razaqzada, Market Analyst at ThinkMarkets

Outlook: No one knows where Bitcoin and its alt-coin friends will go next. Only invest if you have money to lose.


Bond yields were expected to skyrocket this year, with investors demanding a higher rate of return to offset the threat of rising inflation.

Yet, as of this writing, 10-year US Treasury bonds are only yielding 1.34 percent. In the UK, 10-year gilts only offer 0.7%.

Bonds offer portfolio diversification, but it’s difficult to be positive given current low yields and a global economy that appears to be starting to take off, Khalaf said.

“Inflationary fears have not really taken root yet, which is dragging down returns,” he adds.

Chinese government bonds offer the best risk / return profile, while emerging Asian bonds Investment grade corporate bonds also look attractive, Paolini said.

Outlook: Inflation remains a concern, but the big bond market liquidation has been avoided for another year.

Updated: July 12, 2021 5:00 a.m.


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