Introduction

Something interesting has happened across global equity markets.

Over the trailing three years, U.S. equities (SPY) have returned 22.1% annualized, developed international equities (EFA) 19.1%, and emerging-market equities (IEMG) 22.7%. The pattern holds across the board: world equity (VT) is at 21.4%, world ex-U.S. (ACWX) at 20.9%, and the Eurozone (EZU) at 20.5%.

Those are strong returns across the board. Despite very different market environments, all of them have delivered returns close to an impressive 20% annualized.

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Why three years?

A three-year window is long enough to look beyond short-term market moves while still reflecting the current investment cycle. Today's trailing period begins in August 2023, several months after the 2022 market low.

So, how unusual is this?

We focused on these three because they're distinct asset classes, while the other regions in the chart above are combinations of them. Our common history goes back roughly 20 years (2003) and gives us more than 5,000 daily observations to compare with today.

• The returns are unusually close today. Only about 2% of historical observations for SPY, EFA, and EEM had the three ETFs this tightly clustered. Put another way, 98% of the more than 5,000 historical observations had a wider gap than we see today.

• Today's spread is much tighter than normal. Today, the difference between the highest and lowest three-year annualized return for SPY, EFA, and EEM is just 3.6%. Historically, the median spread has been about 11.2%.

• Current returns are well above their historical averages. SPY's current three-year annualized return is 21.8%, compared with a historical rolling three-year average of 10.8%. EFA is 19.2% vs. 6.1%, and EEM is 22.9% vs. 6.9%.

Different views, same destination

Whether your equity view was U.S.-focused, globally diversified, developed international, emerging markets, or European, the three-year outcomes have been remarkably similar.

As we know, past performance or trends is no guarantee of future results or trends, so this is just an interesting point-in-time observation. That is it.

Disclosure

This content is provided for informational and educational purposes only and should not be relied upon as investment advice. No representation is made that any investment strategy or market view will be successful. Past performance is not indicative of future results. All investing involves risk, including the loss of principal. Please refer to our Terms and Conditions for more information.