Finding the top performing investments

A quick review of the top performing investments in 2016 and beyond.

One of the most important concept in the world of Finance is the concept of Risk-Return
Tradeoff. To put it simply, there exists a direct relationship between risk and reward and in
order to achieve greater reward one must accept to take more risk. Any rational investor wants
to find the most profitable investments. However, each investor has unique characteristics and
a risk tolerance of its own, which means that there is no such thing as a one investment fits all.
Comparing Real Estate investments to Stocks investments is a perfect way to illustrate this.
Most investors consider Stocks riskier than Real Estate. This is largely because they believe
that stock prices fluctuate more significantly than property prices and this is largely true.
However, when it comes to long-term performances, Stocks are by far the best type of asset
any investor can find. The last couple of years have confirmed this once again and the vast
majority of shareholders throughout the world recorded large profits.

There is a multitude of different types of investors but Stock markets are also diverse and they
do not necessarily behave in a uniform way. It is however still possible to classify them into
three major groups: the US market, the European markets and what we can call the Asian and
other emerging markets.

US stock Market

The US stock market remains as of today the largest and most influential market in the world.
Its power and influence are still unmatched, although there is no doubt that countries such as
China or to a lesser extent India are constantly filling the gap. The year 2016 has witnessed the
most dramatic electoral exercises of the 21st century with President Donald Trump voted into
the white house and the main US indexes, the Dow Jones and the S & P 500, recorded strong
performances over the year. In fact, the Dow Jones index posted an annual performance of +
13.5% while the S & P 500 Index recorded an annual gain of approximately +10%. It is of
importance to keep in mind that these performances do not take into account the dividends
received, which simply means that an investor who would have managed to perform as well as
the indexes would have actually achieved an additional 2% to 3% return over the year. Of
course, when we talk about indexes, what we really talk about is averages. Some stocks
underperformed the indexes while others over-performed them. Among what we can call 2016
winners, we can mention Berkshire Hathaway, holding company of the American billionaire
Warren Buffet, which recorded a performance of 23.4% over the year.
Overall, investing in the US stock markets in 2016 has proved to be an excellent idea to say
the least and investing in US stock markets has never been easier not only for US residents but
also for foreign investors. Provided you have at least a few thousand dollars to invest, there are
many ways to proceed. Among the most popular brokers in the United States are the notorious
brokers such as Etrade, Ameritrade and Fidelity. With regards to funds, Robeco US Premium
Equities specializes in large cap stocks and Schroder ISF US Small and Mid Cap Eq managed
by Jenny B Jones have proven their reliability and consistent strong performances. Jenny B
Jones is praised for the strong resilience of her portfolios during difficult periods.

European stock markets

2016 has also turned out to be a good year as a whole for European stock markets despite strong
regional disparities and dramatic electoral exercises with the Brexit. You had to look to Eastern
Europe to find the best performances.The Hungarian market recorded a remarkable annual
performance of + 36%, while countries such as Croatia and Bulgaria recorded performances of
more than +20%. Most of Western European markets also recorded gains, but more modest
than in the rest of the continent. In France, the CAC 40 recorded an increase over the whole
year of almost +5%. In the United Kingdom, the FTSE 250, which is more focused on the
domestic market than the FTSE 100, recorded an increase of + 3.7%. Similarly to the US stock
markets, these performances do not even take into account dividends. There are nowadays
many different ways to invest in European equities and some of the most popular stockbrokers
in Europe include Saxo Bank, Degiro and CapTrader.

There are multiple funds specialized in European stocks. Amiral Gestion is one of them and is
an employee owned investment manager. The firm provides its services to individual and
institutional investors. It invests in value stocks of companies across all capitalizations.
Franois Badelon, a former financier of the Financire de lchiquier, created the company in
2003.

Asian and Emerging Markets

Emerging countries are the most dynamic economies in the world. The two Asian giants, China
and India, experienced various fortunes in 2016. The Chinese stock market remained
essentially unchanged, while the main Indian stock index ended the year on an increase of more
than 11%. Financial experts disagree on the immediate future of these markets but there is a
consensus on their massive potential in the long term. With a growth rate currently slightly
higher than that of its Chinese neighbor investors in India are particularly optimistic. The same
goes for Vietnam, a much smaller country in term of population than India but a country that
is experiencing a very strong growth and a rapidly growing stock market. The Vietnamese
stock market finished 2016 on a good performance of nearly +15%. When we associate the
notions of stocks and emerging countries, we obtain a detonating cocktail where the potential
gains but also the associated risks are very important. Political and economic risks in these
areas are also significant and cannot be ignored. Investing successfully require good financial
knowledge and this is even more the case when it comes to emerging markets. It also requires
a thorough knowledge of the countrys specificities. Over the years, several funds and financial
advisory firms have specialized in these markets and help their clients invest. Examples of such
companies include Fonds Desjardins, a Canadian investment fund, Anh Thomas Investment,
an international consulting firm based in Vietnam and the United States, and HSBC, which is
the first foreign bank in China.

Auteur: William Colbes

Source: Finance Journal
Contact Information: williamcolbes@gmail.com
Name: William Colbes