2012: Despite the headlines, a strong year

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Fiscal cliff, high unemployment, euro crisis, stalled economy, divisive election, Congressional gridlock, US debt downgrade, nuclear threat. If you watched the news in 2012, you’d be convinced it was a dismal year for the markets.

But it wasn’t. Quite the contrary.  The investment performance numbers are in for 2012, and they tell a far better story than you might think.

Index ETFs surge

Of the 64 index ETFs we use at Osbon Capital, 62 were up in 2012, some quite dramatically. Here are some of the US stock ETFs. Click for the full list.

Data source: Bloomberg. Total return includes appreciation
and dividends. Click image for full list.

You would never know it by reading the news

Among stocks, the commonplace S&P 500 was up 15.8 percent, Europe (VGK) was up 21 percent, and emerging markets (VWO) gained 18.8 percent. VNQI, Vanguard’s international real estate fund led our list with a gain of 41.6 percent. Bonds (BND Vanguard total bond) managed a 4 percent return, and gold squeaked out a 5.2 percent gain. In other words, almost everything went up.

Hedge funds lag again

By contrast, the hedge fund group, the supposedly elite and turbo-charged class of investments, had another very lackluster year. The Economist reports a popular hedge fund benchmark was up just 3 percent last year. According to the same article, it was the ninth time in ten years that hedge funds trailed the S&P; the exception was 2008 when both dropped violently.

Average is above average

We’ve said it before but we’ll repeat it often as possible. The so-called “average” returns of index funds routinely beat active investment management.  That’s why we advise our clients to forget racing, betting, or guessing returns, and simply reap market returns with a diversified portfolio of low-cost tax-efficient index ETFs.

Amid the doom and gloom pronouncements of headlines and hypsters, it’s easy to get distracted and discouraged. The results of 2012 remind us to stay focused on your own investment goals instead. After all, it is all about you.


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This article may include forward-looking statements. All statements other than statements of historical fact are forward-looking statements (including words such as “believe,” “estimate,” “anticipate,” “may,” “will,” “should,” and “expect”). Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Various factors could cause actual results or performance to differ materially from those discussed in such forward-looking statements.

Nothing in this article is intended to be or should be construed as individualized investment advice. All content is of a general nature. Individual investors should consult their investment adviser, accountant, and/or attorney for specifically tailored advice.

Performance is not indicative of any specific investment or future results.  An investment cannot be made directly in an index. 

Securities listed constitute the current universe of investments considered by the Adviser.  Client account holdings and performance may vary significantly and do not include all the securities listed.  The universe of investments is under constant review and evaluation and, therefore, is subject to change without prior notice.

Any information provided by Adviser regarding historical market performance is for illustrative and education purposes only.  Clients or prospective clients should not assume that their performance will equal or exceed historical market results and/or averages.

While the Adviser believes the outside data sources cited to be credible, it has not independently verified the correctness of any of their inputs or calculations and, therefore, does not warranty the accuracy of any third-party sources or information.


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