Saturday, December 09, 2006

Investing in 2007 - Part I

In this series of articles, we will look at what would be possibly be good investment strategies for 2007. We will begin by looking at 2006 and go on to see what categories would perform well in the coming year. In this article we will focus on 2006 performance thus far of various asset categories.

In general, 2006 has been a stellar year for investors with many raking in double digit returns. This year has seen a steady bull market across all asset categories. Let us review the returns thus far in the various asset categories.

Large cap value:

As of 7th December, IWW, the Russel 3000 value index fund had returned 20%.
Similarly, the Vanguard value vipers VTV had returned close to 20% for the year as well.
The spider dividend ETF, SDY had returned 16.25% thus far in the year.

So any buy and hold investor has racked up double digit gains without expending a lot of effort.

Large cap blend:

In the large blend category, there are several interesting indices. The most interesting is the SP500 index. SPY, the spiders has returned 14.83% thus far in the year. The competing funds from iShares IVV has returned 14.92% and the vanguard fund VV has returned 14.7%. The most mentioned category in CNBC is the Dow Jones Industrial average. Diamonds or DIA that tracks the Dow Jones Industrial Average has returned 17.03% thus far in the year.

The iShares Russel 3000 index fund, IWV has returned 14.96% this year comparable to the SP500 index fund. The other interesting fund is the Ryder SP500 equal weight ETF that buys all stocks in the index in equal proportion. The ETF RSP has returned 13.5% this year thus far.

The vanguard total stock market vipers VTI has also done well returning 14.95% for the year.

Large cap growth:

The large cap growth category has been a laggard (comparatively) thus far this year. In the large growth category, the Nasdaq composite QQQQ has returned about 8.14% so far. The Russel 3000 growth index fund IWZ has returned 9.75%. The other interesting ETF in the category, the vanguard growth vipers, VUG has returned 9.77%.

Midcap value:

In this category, the iShares Russel Midcap value index fund - IWS has returned close to 20%. Another ETF in this category, streetTracks DJ Wilshire Mid Cap Value ETF, EMV has returned 16.67% so far this year.

Midcap blend:

In this category, the iShares Russel Midcap Index Fund - IWR has returned 16.15% thus far this year. Midcap spider MDR has returned 11.69% and Vanguard Midcap Vipers VO has returned 14.94% thus far this year.

Midcap growth:

In the midcap growth category, iShares Russel Midcap Growth Index Fund IWP has returned 12.25% for the year. StreetTrack Wilshire Midcap Growth ETF, EMG has returned 12.22% for the year.

Small cap value:

In the domestic small value category, IJS has returned close to 20% this year. The returns from Vanguard Small Cap Value Vipers, VBR has been a shade lower at 19.7%.

Small cap blend:

In this category, the Vanguard Small Cap Vipers VB has returned 17.01% for the year. The iShares Russel 2000 Index Fund, IWM has returned 18.89% for the year.

Small cap growth:

In the small cap growth category, the Vanguard Small Cap Growth Vipers VBK has returned 14.2% for the year. The iShares Russel 2000 growth index fund IWO has returned 14.76% for the year.

Commodities ETFs:

The vanguard materials vipers VAW has returned 20% for the year. Similarly, XME, an ETF for the SPDR metals and mining fund has returned 18% in the last six months. The iShares Goldman Sachs Natural Resources ETF IGE has returned 16.3% for the year. The gold ETF GLD has returned about 19% for the year and silver ETF SLV has returned -2.3% for the year. The oil ETF USO has returned about -20% since inception in mid year this year.


In summary, 2006 has been a good year for domestic investments. All the fund categories have done well with many posting double digit gains. The commodities have been mixed with some doing better than others.

Next article in this series:

In the next part of this series, we will review the results from international funds thus far in 2006.

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