Comments on: My Annual Investment Portfolio Tune-up: Did I Beat the S&P 500 in 2007?

By: DR

DR — Sat, 18 Apr 2009 01:51:12 +0000

Sanjeev, that’s a great question. In my view, a fund should be compared against the index that most closely matches its asset class. For large U.S. companies, that’s typically the S&P 500. For mid-cap to small-cap companies, the Russell 3000 or Wilshire 5000 is the better comparison.

By: Sanjeev Bhadresa

Sanjeev Bhadresa — Fri, 17 Apr 2009 00:27:45 +0000

Just a more general question. Why do people compare their performance against the S&P500 specifically. Why not the Russell 3000 for example?

By: DR

DR — Mon, 28 Jan 2008 02:48:05 +0000

JJ, Interesting approach. But when it comes to investing, I strive for mediocrity. Striving for more usually results in a lot less. How have your investments performed over the past 15 to 20 years? Also, what were you invested in during 2007 that returned 30%?

By: JJ

JJ — Sun, 27 Jan 2008 23:24:35 +0000

The S&P 500 increased 3.81% over 2007.
My combined Roth and IRA was up 30.31%.
My wife’s, which I manage, were up 25.95%.

The year before, our larger accounts were managed by a very big name, well known to anyone familiar with investing. While he beat the S&P which was up 13.62% for 2006, my wife’s accounts were up 25.75%.
For 2005, the figures were similar. S&P 3.69%, my wife’s +14.01%

After three years of kicking his butt, and other problems as well, I fired him and do it myself.

I rode REITs, specifically FRESX, for five years, but when it got tired, I left for FIREX late in 2007, and then quickly sold FIREX for things like EWZ, OBCHX, and FXI.

Portfolio diversification is terribly overrated. It ensures mediocrity.

Nevertheless, all these previous successes did not avail me much during the past five months.

By: DR

DR — Sat, 26 Jan 2008 00:18:07 +0000

mobajwa, absolutely. All returns are net not only of the expense ratio, but also of all trading fees the funds charge investors, which aren’t included in the expense ratio.

By: mobajwa

mobajwa — Fri, 25 Jan 2008 22:27:27 +0000

Just curious. do the return figures after factoring out the expense ratio’s of the funds ?

By: DR

DR — Sun, 30 Dec 2007 02:06:00 +0000

Martijn, that’s a very good observation. In fact, my international investments in general over the past several years have contributed a significant portion of my gains. The falling dollar has helped.

By: DR

DR — Sun, 30 Dec 2007 02:04:22 +0000

Debbie M, I couldn’t agree more that you should compare individual funds with their respective benchmarks. Comparing an emerging market fund to the S&P 500, for example, would be pointless. You can follow the links I have for each fund to the Morningstar Snapshot, and it will show you how each fund has done versus the S&P 500 and the fund’s category. In 2007, the Vanguard Emerging Mrkt fund beat its category and its benchmark, while the Vanguard REIT fund did not. As for the entire portfolio, the S&P 500 or some other “total market” benchmark is as good as any for a meaningful comparison.

By: Martijn

Martijn — Sat, 29 Dec 2007 09:46:21 +0000

I have read this post and previous posts with interest, however I cannot escape the impression that if it hadn’t been for the single emerging market fund (VEIEX) @ 4.19 that the overall performance of the portfolio would have been only 3.3% or about 54% of the S&P index.

That would make this more or less a close escape from the turmoil in the US markets. I suppose that is the purpose of a well balanced portfolio.

Enjoy the holidays!

By: Debbie M

Debbie M — Sat, 29 Dec 2007 03:18:52 +0000

Make sure you compare each fund to the appropriate index. Although it’s interesting to compare your entire portfolio to the S&P 500, you should be comparing each individual fund to the appropriate index to see how well it fared against other stocks in the same category. As you said, REITs did terrible this year and emerging stocks did great. But how does your REIT investment compare to REITs in general, and how does your emerging stocks fund compare to other emerging stocks?