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Saturday April 21st 2018

Investing Returns for 2017

Minimum Variance Portfolio with 3 Assets. Mar-2013.
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.

Table 0.1 2017 Investment Return for Vanguard Total World Funds
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.

Table 1.1 2017 Investment Return for Vanguard Total Stock Index Funds
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.

Table 1.2 2017 Investment Return for Vanguard U.S. Value and Growth Stock Funds
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.

Table 1.3 2017 Investment Return for Vanguard Large and Small-cap U.S. Stock Funds
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.

Table 1.4 2017 Investment Return for Vanguard Small-cap U.S. Stock Funds
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.

Table 1.5 2017 Investment Return for Vanguard Dividend Stock Funds
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

Table 1.6 2017 Investment Return for Vanguard International Stock Funds
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.

Table 1.7 2017 Investment Return for Vanguard International Stock Funds
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.

Table 2.1 2017 Investment Return for Vanguard Treasury Bond Funds
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.

Table 2.2 2017 Investment Return for Vanguard Municipal Bond Funds
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.

Table 2.3 2017 Investment Return for Vanguard Corporate Bond Funds
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?

Table 3.1 2017 Return for Bullion.
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.

Table 3.2 2017 Return for Precision Metal 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.

Table 4.1 2017 Investment Return for Several Vanguard Balanced Funds.
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.

Table 4.2 2017 Investment Return for Unique Portfolios.
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.

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