Photo courtesy Standard Fotos
Financial Year 2017 is in the history books. Donald Trump had his first year as President. The year saw Europe take turn to the right. Once again, it’s time to review the investment returns of various asset classes for the past year. We’ll look at Vanguard Mutual Funds, because they are readily investable and low cost.
Executive Summary
2017 was a banner year for most investors. Equity risk was rewarded big time. Total U.S. Stock Market gained an amazing +21.05%, while Total International stocks did even better 27.40% . Global stocks gained +24.06%.
Section 0. Global Stocks and Bonds
The two fundamental asset classes, stocks and bonds, both made money. Total World Stock Index (VTWSX) gained a huge +24.06% while Total Bond Market Index (VBMFX) gained a small +3.45% and Total International Bond Index (VTIBX) gained just +2.31%
Note that yields are low for both stocks and bonds.
SYMBOL | FUND NAME | CAPITAL RETURN | INCOME RETURN | TOTAL RETURN |
VTWSX | Total World Stock Index | 21.41 | 2.65 | 24.06 |
VMNVX | Global Min Volatility | 13.41 | 2.62 | 16.03 |
VBMFX | Total Bond Market Index | 0.99 | 2.47 | 3.45 |
VTIBX | Total Intl Bond Index | 0.09 | 2.22 | 2.31 |
Section 1. Stocks
While U.S. stocks had amazing returns, International stocks went up even more.
SYMBOL | FUND NAME | CAPITAL RETURN | INCOME RETURN | TOTAL RETURN |
VFINX | S&P 500 Stock Index | 19.48 | 2.18 | 21.67 |
VTSMX | Total Stock Market Index | 18.98 | 2.07 | 21.05 |
VGTSX | Total Intl Stock Index | 23.83 | 3.57 | 27.40 |
Growth Crushed Value
Its was U.S. Growth stocks (VIGRX) turn this year. U.S. Value stocks (VIVAX) also had decent returns.
SYMBOL | FUND NAME | CAPITAL RETURN | INCOME RETURN | TOTAL RETURN |
VIVAX | Value Index | 14.29 | 2.69 | 16.99 |
VIGRX | Growth Index | 26.24 | 1.41 | 27.65 |
Large-Cap Beat Small-Cap
Large-cap (VLACX) had huge gains while Small-cap (NAESX) had good gain.
SYMBOL | FUND NAME | CAPITAL RETURN | INCOME RETURN | TOTAL RETURN |
VLACX | Large-Cap Index | 19.78 | 2.12 | 21.89 |
NAESX | Small-Cap Index | 14.59 | 1.51 | 16.10 |
Small-Cap Growth Had Tremendous Gains
Small-cap Growth won the prize this year. Up almost +22%. Small-cap value was okay.
Real Estate Investment Trusts (REITs) barely eked out a positive return. Disappointing.
SYMBOL | FUND NAME | CAPITAL RETURN | INCOME RETURN | TOTAL RETURN |
VISVX | Small-Cap Value Index | 9.72 | 1.95 | 11.67 |
VISGX | Small-Cap Growth Index | 20.87 | 0.92 | 21.78 |
VGSIX | REIT Index | 0.62 | 4.21 | 4.83 |
Dividend Stocks All Had Good Returns
International High-Dividend and Dividend Appreciation were the big winners.
SYMBOL | FUND NAME | CAPITAL RETURN | INCOME RETURN | TOTAL RETURN |
VHDYX | High Dividend Yield | 13.08 | 3.29 | 16.37 |
VIHIX | Intl High Dividend Yield | 18.43 | 3.86 | 22.29 |
VEIPX | Equity Income | 15.38 | 3.01 | 18.38 |
VDIGX | Dividend Growth | 17.04 | 2.29 | 19.33 |
VDAIX | Dividend Appreciation | 19.79 | 2.35 | 22.15 |
VPU | Utilities ETF | 9.01 | 3.51 | 12.50 |
VDC | Consumer Staples ETF | 8.95 | 2.86 | 11.81 |
All International Markets Shoot the Lights Out
Emerging Market was the winner. Both Europe and Asia also were outstanding
SYMBOL | FUND NAME | CAPITAL RETURN | INCOME RETURN | TOTAL RETURN |
VDMIX | Developed Market Index | NA | NA | NA |
VEIEX | Emerging Market Stock Index | 28.22 | 2.94 | 31.15 |
VEURX | European Stock Index | 23.42 | 3.40 | 26.82 |
VPACX | Pacific Stock Index | 25.18 | 3.21 | 28.39 |
Foreign Stock Sectors Go Crazy
The gains this year are ridiculous.
SYMBOL | FUND NAME | CAPITAL RETURN | INCOME RETURN | TOTAL RETURN |
VTRIX | International Value | 25.61 | 2.36 | 27.96 |
VWIGX | International Growth | 41.76 | 1.20 | 42.96 |
VINEX | International Explorer | 35.98 | 2.79 | 38.77 |
VGXRX | Global ex-US Real Estate | 21.60 | 4.66 | 26.26 |
Section 2. Bonds
Rising interest rates hit short and medium Treasuries.
SYMBOL | FUND NAME | CAPITAL RETURN | INCOME RETURN | TOTAL RETURN |
VFISX | Short-Term Treasury | -0.75 | 1.14 | 0.39 |
VFITX | Intermediate-Term Treasury | -0.18 | 1.75 | 1.57 |
VUSTX | Long-Term Treasury | 5.71 | 2.88 | 8.58 |
VIPSX | Inflation-Protected Securities | 0.46 | 2.35 | 2.81 |
Very modest gains in Municipal bonds.
SYMBOL | FUND NAME | CAPITAL RETURN | INCOME RETURN | TOTAL RETURN |
VWSTX | Short-Term Tax-Exempt | -0.06 | 1.06 | 0.99 |
VWITX | Intermediate-Term Tax-Exempt | 1.73 | 2.81 | 4.53 |
VWLTX | Long-Term Tax-Exempt | 2.82 | 3.61 | 6.43 |
VWAHX | High-Yield Tax-Exempt | 3.91 | 3.94 | 7.84 |
VCITX | California LT Tax-Exempt | 3.38 | 3.42 | 6.81 |
In the corporate sector, bonds had small gains. Long corporates did best.
SYMBOL | FUND NAME | CAPITAL RETURN | INCOME RETURN | TOTAL RETURN |
VCSH | Short-Term Corp | 0.16 | 2.27 | 2.21 |
VCIT | Intermediate-Term Corp | 2.16 | 3.35 | 5.27 |
VCLT | Long-Term Corp | 7.80 | 4.58 | 11.78 |
VWEHX | High-Yield Corporate | 1.54 | 5.48 | 7.02 |
Section 3. Precision Metals
Palladium shines. Platinum lags. Is Platinum under $1,000 per troy ounce a good value?
SYMBOL | METAL | TOTAL RETURN | PRICE $/troy oz |
XAU | Gold Bullion | 13.68 | $1302.610 |
XAG | Silver Bullion | 6.53 | $16.917 |
XPT | Platinum Bullion | 4.19 | $929.917 |
XPD | Palladium Bullion | 56.48 | $1061.500 |
XCU | Copper Bullion | 31.09 | $3.27156 per lb |
Similar for the ETFs.
SYMBOL | FUND NAME | CAPITAL RETURN | INCOME RETURN | TOTAL RETURN |
GLD | Gold ETF | 12.84 | 0 | 12.84 |
SLV | Silver ETF | 5.82 | 0 | 5.82 |
PPLT | Platinum ETF | 2.56 | 0 | 2.56 |
PALL | Palladium ETF | 55.87 | 0 | 55.87 |
Section 4. Balanced Funds
Many investors hold a balanced portfolio. Double digit returns, provided there was enough allocation to stocks.
SYMBOL | FUND NAME | CAPITAL RETURN | INCOME RETURN | TOTAL RETURN |
VBINX | Balanced Index | 11.60 | 2.15 | 13.75 |
VWINX | Wellesley Income | 7.02 | 3.13 | 10.16 |
VWELX | Wellington | 11.93 | 2.79 | 14.72 |
Warren Buffet beat Harry Browne.
SYMBOL | FUND NAME | CAPITAL RETURN | INCOME RETURN | TOTAL RETURN |
BRK.A | Berkshire-Hathaway | 21.91 | 0 | 21.91 |
HBPP | Harry Browne Permanent Portfolio | 10.81 |
The Harry Browne Permanent Portfolio showed a respectable 10.81% total return in 2017, similar to other balanced investors. This portfolio splits equally between stocks, gold, long-term Treasuries and cash. It is important to re-balance each asset back to 25% at the start of the year. Otherwise your asset allocation and performance will drift.
Total Stock Market (VTI) was up +21.21%, while the price of Spdr Gold Shares (GLD) was up +12.81%. The 1/4 of the portfolio in iShares 20+ Year Treasury Bond (TLT) was up +8.95% and iShares 1-3 Year Treasury Bond (SHY) returned a paltry 0.26%. These numbers are from Morningstar.com.
Summary: Most Investors did great in 2017
There were no really bad spots in 2017, unless you were 100% in short-term Treasuries.
Balanced investor saw 7% to 12% total returns.