Finding the year-by-year total returns for the major indices can be a challenging task, so hopefully investors will find the following table useful. The left column shows the return of the Barclay Capital U.S. Aggregate Bond Index (which was known as the Lehman U.S. Aggregate Bond Index prior to Lehman Brothers’ collapse). The index measures the performance of investment grade bonds in the United States. According to Babson Capital, as of February 2011 the Index consisted of “approximately 8,200 fixed income issues and is valued at around $15 trillion, representing 43% of the total U.S. bond market. The index currently includes U.S Treasuries, government-related issues,corporate bonds, agency mortgage-backed pass-throughs, consumer asset-backed securities, and commercial mortgage-backed securities.” The S&P 500 Index measures the performance of the 500 largest companies in the U.S. stock market.
Find out more about how stocks and bonds stack up on a longer-term basis.
The table below shows the return of the two indices on a year-by-year basis in the 32 calendar years between 1980-2012, followed by some statistics on each.
Year, Barclays Aggregate Return, S&P 500 Return, Difference
- 1980 2.71% 32.50% -29.79%
- 1981 6.26% -4.92% 11.18%
- 1982 32.65% 21.55% 11.10%
- 1983 8.19% 22.56% -14.37%
- 1984 15.15% 6.27% 8.88%
- 1985 22.13% 31.73% -9.60%
- 1986 15.30% 18.67% -3.37%
- 1987 2.75% 5.25% -2.50%
- 1988 7.89% 16.61% -8.72%
- 1989 14.53% 31.69% -17.16%
- 1990 8.96% -3.11% 12.07%
- 1991 16.00% 30.47% -14.47%
- 1992 7.40% 7.62% -0.22%
- 1993 9.75% 10.08% -0.33%
- 1994 -2.92% 1.32% -4.24%
- 1995 18.46% 37.58% -19.12%
- 1996 3.64% 22.96% -19.32%
- 1997 9.64% 33.36% -23.72%
- 1998 8.70% 28.58% -19.88%
- 1999 0.82% 21.04% -21.86%
- 2000 11.63% -9.11% 20.74%
- 2001 8.43% -11.89% 20.32%
- 2002 10.26% -22.10% 32.36%
- 2003 4.10% 28.68% -24.58%
- 2004 4.34% 10.88% -6.54%
- 2005 2.43% 4.91% -2.48%
- 2006 4.33% 15.79% -11.46%
- 2007 6.97% 5.49% 1.48%
- 2008 5.24% -37.00% 42.24%
- 2009 5.93% 26.46% -20.53%
- 2010 6.54% 15.06% -8.52%
- 2011 7.84% 2.11% 5.73%
- 2012 4.22% 16.00% -11.78%
Barclays Aggregate Statistics:
Years Positive: 32 of 33
Highest Return: 32.65%, 1982
Lowest Return: -2.92%, 1994
Average Annual Return: 8.80%
$1000 would have grown to: $15,218.58
S&P 500 Statistics:
Years Positive: 27 of 33
Highest Return: 37.58%, 1995
Lowest Return: -37.00%, 2008
Average Annual Return: 12.64%
$1000 would have grown to: $38,526.32
Comparative Statistics:
Years Bonds Outperformed: 10 of 33
Bonds’ Largest Margin of Outperformance: 42.24%, 2008
Bonds’ Largest Margin of Underperformance: -29.79%, 1980
How would have a 50-50 allocation between the two indices have fared?
Years Positive: 29 of 33
Highest Return: 28.02%, 1995
Lowest Return: -15.88%, 2008 (The others were 2002 (-5.92%), 2001 (-1.73), and 1994 (-0.80%)
Average Annual Return: 10.72%
$1000 would have grown to: $25,187.93
This shows that investors would have given up about 15% of stocks’ return with the 50-50 split, but the combined portfolio would have had substantially lower volatility.
Returns Since 1928
Once the sample is enlarged, the performance gap increases. The Federal Reserve Bank of St. Louis has measured the returns of stocks, Treasury bills, and Treasury bonds since 1928. Note that these represent different investments than those presented above, since neither the S&P 500 or the Barclays Aggregate dates back that far. According to the Bank’s website, $100 invested in stocks in 1928 would have grown to $166,787.51 by the end of 2011, while $100 in T-bills and T-bonds would have grown to $1,970.44 and $6,726.52, respectively.
