Investor Derby: Small cap stocks lead market in 3Q

NEW YORK, N.Y. – Small caps and foreign stocks were the place to be in the third quarter.

That’s the conclusion to be drawn from The Associated Press’s analysis of nine types of investments, which shows investors pocketed the largest gains from their holdings of small cap stocks, emerging market stocks and large foreign stocks in the third quarter.

Most types of investments did well in the third quarter, with high-yield bonds and large cap U.S. equities the next best performers over the last three months. Small caps and emerging market stocks are also the best performing sectors over the last year.

Real estate investment trusts, municipal bonds and gold were the worst performing investments during the third quarter.

The AP analysis, using data from FactSet, shows that the top-performer over the past 10 years for regular investors, those who invest a portion of their income every month and hold for the long term, is still real estate investment trusts. It’s also the best performing sector over the last five years.

That’s true even though the period includes the U.S. housing crisis. After the crisis passed, investors snapped up REITs as real estate gradually rose in value and investors were drawn to the large dividend payments REITs pay.

Since 2006, emerging market stocks, foreign big cap stocks and gold are the worst-performing sectors.