Have your clients ever asked about the best calendar periods to invest in certain asset classes — or have you ever wondered about this yourself?

While past performance is not necessarily an indicator of future returns, it may be instructive for you and your clients to look back at the returns of various asset classes by month and quarter in order to determine which months for each ultimately produced the best long-term results.

To that end, the study described in this article provides you with 36 years of data, from January 1980 to December 2015. Seven asset classes were included: large-cap U.S. stocks, small-cap U.S. stocks, non-U.S. stocks, real estate, commodities, bonds and cash. A multi-asset portfolio consisting of all seven asset classes in equal proportions was also evaluated.

Large-cap U.S. equity was represented by the S&P 500, small-cap U.S. equity was represented by the Russell 2000, non-U.S. equity was represented by the MSCI EAFE Index and real estate was represented by the Dow Jones U.S. Select REIT Index.

In addition, commodities were represented by the S&P GSCI Commodity Index, the performance of U.S. aggregate bonds was represented by the Barclays Capital Aggregate Bond Index starting in 1976 and cash was represented by 3-month Treasury Bills. The multi-asset portfolio was composed of 14.28% allocations to each of the seven asset classes (with annual rebalancing).


As shown in the chart “Returns by Month,” large-cap U.S. stocks had the highest return in the month of April, an average gain of 1.84%. Close behind was November, with an average return of 1.8%. In fact, the fourth quarter overall tends to be the best for large-cap U.S. stocks.

For U.S. small stocks, the month with the highest average return (by quite a margin) has been December, with an average of 2.66%; November is a far-behind second at 1.79%. Non-U.S. stock returns tend to be highest in April. Bonds and cash don’t manifest nearly the same spread of performance by month; nevertheless, October tends to be the best month for U.S. bonds, whereas cash is slightly better in March, but only by a trivial amount.

Real estate has its best returns in December by quite a margin. The next two closest months are March and April.

Commodities have generated their best performance in March. Another clear attribute of commodities’ performance is a very weak fourth quarter, on average.

Finally, our multi-asset portfolio had its highest average returns in April, with December producing the second-highest average returns. While it’s interesting to observe the average returns of various asset classes by month, what really matters is the final account value of an actual investment methodology.

Shown in the chart “Final Account Value” are the returns of a $1,000 annual investment over the same 36-year period, for a total of $36,000 invested. The $1,000 investment was made once each year starting in 1980, over various months. The final account value was measured in the same month 36 years later. Thus, if the month chosen was March, the first $1,000 investment was made on March 1, 1980, the second on March  1, 1981, and so on. Then the final account value was measured on March 31, 2015.

Investing each year in the month of January led to the highest ending account value in U.S. bonds, cash and real estate. Investing in February produced the best long-term outcome in large U.S. stocks and the multi-asset portfolio.

If investing in small U.S. stocks, March was the best month for long-term returns. Finally, if investing in non-U.S. stocks, April led to the highest final account value.

In some cases, the difference between the best month and the second-best month is quite small. In other cases, the margin between the best and second-best months was fairly sizable.


As shown by the last row in the table, the best month to invest for each asset class led to higher ending account values than simply investing $83.33 each month over the 36-year period.

It is interesting to observe that the best month to invest in the various asset classes was generally not the month with the highest average return. In fact, it was quite the opposite in most cases.

For large-cap U.S. stocks, the best month to invest for the long term was February, but February had the fourth-smallest average monthly return of 0.66%.

For U.S. small stocks, investing in March produced the highest ending account value, but the average return of 1.25% in March was in the middle of the pack (seventh-best monthly average return).

Non-U.S. stocks were something of an odd duck, with April having the highest average return and being the month of investment that led to the highest ending account value. Bonds and cash don’t demonstrate enough variance in ending account value to really fuss over.

Investing in real estate in January produced the best outcome historically, with the fifth-best average return during the year. Commodities produced the best outcome if investing in April, and April had the second-highest average monthly return, representing a semi-odd duck.

The multi-asset portfolio produced the best final outcome when investments were made in February, and February was tied with November for the fifth-highest average monthly return.


In general, the best final outcome was achieved by investing in a month that had

a middle-of-the-pack monthly average return, the exceptions being non-U.S. stocks and commodities.

In the case of non-U.S. stocks, the final ending account value if investing in February each year was quite close to the account value if investing in April.

The average return for the MSCI EAFE Index in February was the seventh-best average return. So we see the middle-of-the-pack phenomenon again.

For commodities, the second-highest ending outcome occurred if investing in February, and the average return for commodities in February was the fourth-best average return.

Another clear takeaway from this study is that investing early in the year led to higher ending account values after 36 years compared to investing later in the year. This is the case even though six of the eight investments produced their best returns in the fourth quarter (large U.S. stocks, small U.S. stocks, non-U.S. stocks, bonds, multi-asset portfolio) or the third quarter (commodities) of the year.

If history is a faithful guide, the best advice is to invest early in the year.

But it’s important to remember that the results in this analysis are from a 36-year period; don’t expect to replicate them over a much shorter time frame.