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Monday, October 1, 2012

Year-To-Date Performance

Source: Capital Pixel
Markets overcame fears of Europe imploding, weakness in Asia, softening U.S. earnings and mixed economic data and put in a strong quarterly performance over the first 9 months of 2012. Investors who were well-diversified and who stayed with their asset allocations were again well rewarded as they were over the first 6 months.  This performance builds on the 20-year performance ended 2011 of the diversified portfolio as reported by BlackRock.  BlackRock's report covers several asset classes as well as a diversified portfolio comprised of 35% fixed income and 65% stocks.  Over the 20-year period ended 2011, the portfolio achieved an average annualized return of 7.7%.  At that rate, money doubles in approximately 9 years.  Thus, over the period, a sum of money invested in line with the diversified portfolio would have quadrupled.

The performance of the asset classes comprising the diversified portfolio over the 1st 9 months of 2012 along with component weights and expense ratios are shown in the following table constructed with data from Morningstar :

The overall portfolio has achieved a return of   11.02% year-to-date.

As noted above, there has been plenty of news and reasons for investors to stay on the sidelines in this market. E urope, Asia, weakening corporate profits, "fiscal cliff" - you name it.  And, in fact, judging by the returns, many big players have stayed on the sidelines and haven't participated.  These include active mutual funds, hedge funds, huge state pension funds, and college endowment funds.

This portfolio would be appropriate for someone in their 30s or 40s with a slight conservative bent.  As such, it is a useful benchmark for your own management or to put in front of your advisor.  If you haven't achieved a  return year-to-date close to 11%, you should at least learn why.  It could be because you have a more conservative allocation or you or your manager guessed wrong in picking stocks/timing the market or even because you are in high cost funds.

If your return is higher than 11%, pat yourself on the back!

Disclosure:  This post is for educational purposes only.  I own for myself and my clients some of the funds mentioned above.


  1. This illustrates the power of indexing beautifully!

  2. And you don't have to hand over 1 to 2% of your assets each year!