could you fill out this document 13.2: PORTFOLIO DIVERSIFICATION
Assignment 13.2: MFS — 20 Years of the Best and
Worst
Name: ___________________________________________________ Class Period: ________
1. Based on average 20-year performance, what were the top three performing asset classes?
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a. What were the worst three?________________ ________________ ________________
2. Look at the small table below the chart on the left. This table shows volatility. In other words,
this table ranks the asset classes based on how reliable their returns were over a three-year
period. The lower the standard deviation, the less volatile an asset class performed. What were
the three most stable asset classes over the past 20 years?
______________________ ______________________ ______________________
3. Which year had the worst overall asset classes performance? ________________________
a. What was the combined performance for all markets that year? _______________________
b. What happened that year that may explain the market performance? ___________________
c. Compare the year before to this year. Which class had the worst drop and by how many
points? (Think: How far did it swing? Example: Small/Mid Caps went from 1.38 percent to -36.79
percent, a 38.17 percent swing)
____________ had a ____________ point swing
d. Compare this year to the year after when things started to rebound. Which class had the best
rise (again, think “swing”) in values and by how many points?
____________ had a ____________ point swing
4. What years had a positive performance in every single asset class? ____________________
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a. What do most have in common? ________________________________________________
5. Comparing the stability table on the bottom with the performance table on the top, what
conclusions can you make about the two measurements? Back up your conclusions with
examples.
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6. Explain how performance over long periods of time (20 years) can nullify the effects of a
volatile market.
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Note: For the next section, only look at the 10-year period of 2000-2009.
7. Which asset class performed the best relative to the others? (Don’t worry about doing any
calculations to see exact numbers, just look at the ranking orders.)
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8. Which asset class was the most volatile? (Again, no math here — just look and see which
one had the biggest/most rises and falls relative to the others.)
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9. Based on what you have learned from this table, describe an investment strategy that you
would choose given the following:
a. You have $50,000 to invest. You may split it up any way you want, but you must have
it invested in a minimum of 3 different asset classes.
b. Your goal is to have as much money as you can by 2058 when you (hopefully) retire.
Your strategy should be specific and detailed. Explain why you chose the classes and amounts
invested in them that you did. Explain why your strategy would be considered aggressive or
conservative.
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10. Once you have a strategy designed from number 9, compare yours to someone else’s
(if working in teams, find someone not in your group) and determine if you think yours is riskier
or less risky and whose you think will yield the bigger returns. Explain your conclusion below.
If you need more space, continue on a separate paper and attach.
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