Any such snapshot is of course flawed. On a rational basis, there’s no reason to look back from the end of the year rather than from the middle, or to choose ten years rather than 12 and a half. But as we all know, markets aren’t purely rational, humans have a habit of attaching significance to things like dates and if the end of the year isn’t a good time to reflect, then I don’t know when is.
So what’s done well? Handily, a list of top-performing funds and investment trusts for the past decade has just landed in my email inbox from investment platform AJ Bell. Gratifyingly, particularly in light of the endless teasing we get to the effect of “why do you keep going on about Japan?”, it turns out that one of our favourite Japanese investment trusts, Baillie Gifford Shin Nippon (LSE: BGS) – of which (in the interests of full disclosure) our editor-in-chief, Merryn, is a non-executive director – is the third-best performing trust of this decade. If you’d stuck £5,000 in Shin Nippon back then and left it, you’d have more than £40,000 now. So we’re glad we kept going on about Japan. For more on why it still looks good, see Steve Russell’s and Tim Price’s comments in our roundtable. Other top performers include the Lindsell Train trust (we’ve always liked its sister fund, Finsbury Growth & Income) and various biotech and technology funds.
Of course, being a contrarian (I’ve even written a book on the topic – read an excerpt on page 26), I’m more interested in what’s done poorly over the past decade. Why? Well, when the market commentators of ten years ago were carrying out their post-mortems on the 2000s, one headline kept cropping up: “The Worst Decade for Stocks Ever”. To be pedantic, it was the worst calendar decade (the worst ten-year stretch for US stocks ended in 1938, according to The Atlantic). But the point is, equities followed an extraordinary bad decade with a really very good one, even though, at the end of 2009, very few people were ragingly bullish about anything at all.
Today, the mood is practically the opposite – it’s hard to find anything that people aren’t incredibly bullish about. Hard, but not impossible. It’s clear that the losers’ list is dominated by one asset class – commodities. That’s not too surprising. The bull market in resources peaked in 2011 and was followed by a vicious bear market. The bottom for both oil and commodities in general arrived in early 2016. But there’s still a lot of catching up to do – according to figures from Fidelity, commodities have lost 3.1% a year over the past decade.
Could they be due a rebound? Perhaps. But a decade in which commodities did well would also imply one in which inflation returned and knocked a market that’s positioned for perpetually low interest rates. What could trigger that? A seductive economic theory called MMT – turn to our Roundtable discussion to find out why it could be the biggest theme of the decade. Meanwhile, from all of us, have a very happy New Year – your next issue of MoneyWeek is out on 10 January 2020.