Better than oil, gold, or stocks, the best place for investors in 2011 was U.S. government debt. Not even a downgrade of the United States' AAA rating and spiralling public deficits stopped a rally in Treasuries, which were the best-performing major asset class of the year.
Benchmark 10-year Treasuries returned nearly 17 percent in 2011, their largest gain since 2008. Other top performers such as gold and oil finished the year with gains of about 10 percent and 8 percent, respectively.
World stocks have lost more than 9 percent for the year, although a steady flow of encouraging U.S. economic data allowed the S&P 500 to erase losses and close practically where it started in 2011.
Growing fears about the euro-zone debt crisis, combined with a pledge by the U.S. Federal Reserve to keep interest rates low through 2013, made the appeal of Treasuries irresistible for investors.
Some, like PIMCO's Bill Gross, the manager of the world's largest bond fund, were forced to abandon heavy bets against U.S. government-related debt halfway into 2011 as it became clear the Treasuries rally was not going away any time soon.
We started the year with a 10-year yield of 3.30 percent and a nearly unanimous view that interest rates had nowhere to go but up, recalled Kevin Giddis, president of fixed income capital markets at Morgan Keegan in Memphis, Tennessee.
It looks like we will close the year with a 10-year yield in the neighborhood of 1.88 percent and a nearly unanimous view that interest rates have nowhere to go but up, he added, stressing that he does not share that view. Count me among the Treasury market bulls for 2012.
Yields on benchmark 10-year Treasuries were at 1.876 percent on Friday, well below the psychologically important level of 2 percent.
Among other top-performing assets, gold traded at $1,564.60 an ounce, up 10.2 percent in 2011 - its eleventh consecutive year of gains.
Gold's strong performance came despite a sell-off in the past few weeks, when tight liquidity in the euro zone forced many investors to sell the metal to meet their financial obligations.
U.S. crude oil prices ended the year with gains of 8.2 percent, at $98.83 per barrel, as instability in oil producing countries such as Libya eclipsed concerns about Europe's crisis.
STOCKS, EURO LOSE
Worries about the fallout from the euro-zone debt crisis weighed on financial markets in 2011 and are expected to continue to pressure stocks and the euro into the new year.
The MSCI All-Country World index finished the year with losses of 9.5 percent, despite a gain of 0.3 percent on Friday.
On Wall Street, however, the Dow Jones rose 5.5 percent for the year while the broader S&P 500 ended practically flat.
We've had some big, sharp moves ... and now we're pretty much flat for the year, said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.
It's disturbing, and I think most people are predicting it's going to be the same next year. Not exactly a fun market to trade, but it is what it is.
On Friday, the Dow Jones industrial average fell 69.48 points, or 0.57 percent, to 12,217.56, while the Standard & Poor's 500 Index lost 5.41 points, or 0.43 percent, to 1,257.61. The Nasdaq Composite Index ended down 8.59 points, or 0.33 percent, at 2,605.15.
In Europe, the FTSEurofirst 300 index rose 0.87 percent on the day, trimming losses in the year to 10.8 percent.
The euro, threatened by a growing credit crisis in Europe, hit a 10-year low against the yen and ended lost 3.3 percent against the dollar in 2011. On Friday, it dipped 0.1 percent against the greenback to $1.2945.
The euro has held up relatively well given the crisis we've seen, but that view is likely to come under pressure in the new year, said Simon Smith, economist at FXPro.
There is huge focus on what's going on in Europe. Next year is likely to be the year when either euro zone leaders send the region on a path toward greater fiscal integration or we see some of the more vulnerable countries having to leave.
Despite gains in oil and gold, other commodities suffered, driving the Thomson Reuters-Jefferies CRB index 8.3 percent lower in 2011, its first annual loss in three years.
(Additional reporting by Luciana Lopez, Emily Flitter, Caroline Valetkevitch and Chris Reese; Editing by Dan Grebler and Andrew Hay)