If you follow U.S. financial media, you might be surprised to know that financial markets turned in somewhat mixed results in 2021. U.S. equities, which dominate the news coverage, did indeed generate very strong returns in 2021. However, fixed income returns were flat-to-negative for the year and international stocks lagged the performance of U.S. stocks by a wide margin (over 20 percentage points). Indeed, as shown in the table below, developed market international stocks (MSCI EAFE index) were up 8.8% for the year, while emerging market stocks (MSCI Emerging Market index) were down 4.6%. Overall, foreign stocks (as measured by the MSCI ACWI Ex USA index) were up 5.5%. Meanwhile, U.S. stocks, as measured by the S&P 500 index, rose steadily throughout 2021, finishing the year up nearly 27% (excluding dividends) and hitting 70 all-time highs in the process – the largest number of new records for
the benchmark index since 1954. Moreover, for the first time in history, all the sectors of the S&P 500
posted double-digit gains for the year.
