Fun Facts Newsletter | July 2013

How did "the market" do today?
How much is "the market" up this year?
Did your stocks beat "the market"?

But have you ever stopped to wonder just what "the market" is? Most investors, including our firm, have historically defined "the market" as the Standard & Poor’s 500 Index or the Dow Jones Industrial Average, both of which are indices of U.S. large company stocks.

But:

  • the S&P 500 is about 70% of the US stock market and
  • US stocks are about 45% of the global stock market, so
  • the S&P 500 is actually about 32% of the world stock market.

So the S&P 500 is not a very good definition of "the market" if it is missing about 30% of the U.S. stock market and 100% of the foreign stock market, especially in our increasingly globalized society where the U.S. is less than 50% of the world stock market.

Hence, as we begin to celebrate Independence Day, we are declaring our independence (a long-standing hallmark of our firm) by replacing the S&P 500 and Dow Jones Industrial Average as benchmarks for "the market" with
(drum roll please...)
the MSCI ACWI IMI NR USD Index. Say that five times quickly!

It stands for:

MSCI

Morgan Stanley Capital International (pioneer in international indices)

ACWI

All Country World Index (Developed and Emerging Markets)

IMI

Investable Market Index (Large, Mid & Small size, excluding microcaps)

NR

Net Dividends Reinvested (Net of dividend foreign tax withholding)

USD

US Dollar (a no-brainer to end with, because it is what we spend)

In the long run, the MSCI ACWI and S&P500 are remarkably close in returns:

As of 05/31: 

15 Years

10 Years

5 Years

3 Years

1 Year

MSCI ACWI

+4.81%

+8.55%

+1.64%

+12.50% 

+26.34%

SP500

+4.61% 

+7.58% 

+5.43%  

+16.87%

+27.28%

As a special bonus with this edition, we are also introducing "Asset Class Leaders and Laggards". Ten stock asset classes are ranked by return, then by weighting, to show that even though the largest weighted asset class of US Large Cap was up by 13.74%, the 3rd, 5th and 6th most heavily weighted asset classes were 8th, 9th and 10th laggards, dragging the world index down to +6.4%.

06/30/13

 

 

 

 

 

Ranked by Return

 

 

 

 

 

Asset Class

Benchmark
Fund
Symbol

06/30/13
YTD %
Return

% Return
Rank

Model
Portfolio
% Weighting

% Weighting
Rank

Leaders

 

 

 

 

 

US Large Value

DFLVX

18.00%

1

12.0%

4

US Small Value

DFSVX

17.73%

2

2.0%

8

US Micro Cap

DFSCX

17.45%

3

1.0%

9

US Small Cap

NAESX

15.89%

4

4.0%

7

US Mid Cap

VIMSX

15.51%

5

14.0%

2

Laggards

 

 

 

 

 

US Large Cap

VFINX

13.74%

6

37.0%

1

US Large Growth

VIGRX

10.52%

7

0.0%

10

International Large Cap

DFALX

2.56%

8

13.0%

3

International Large Cap Value

DFIVX

1.77%

9

9.5%

5

International Emerging Markets

DFCEX

-9.49%

10

7.5%

6

 

 

 

 

100.0%

 

Ranked by Weighting

 

Benchmark
Fund
Symbol

06/30/13
YTD %
Return

% Return
Rank

Model
Portfolio
% Weighting

% Weighting
Rank

US Large Cap

VFINX

13.74%

6

37.0%

1

US Mid Cap

VIMSX

15.51%

5

14.0%

2

International Large Cap

DFALX

2.56%

8

13.0%

3

US Large Value

DFLVX

18.00%

1

12.0%

4

International Large Cap Value

DFIVX

1.77%

9

9.5%

5

International Emerging Markets

DFCEX

-9.49%

10

7.5%

6

US Small Cap

NAESX

15.89%

4

4.0%

7

US Small Value

DFSVX

17.73%

2

2.0%

8

US Micro Cap

DFSCX

17.45%

3

1.0%

9

US Large Growth (*)

VIGRX

10.52%

7

0.0%

10

(*) included in US Large Cap

 

 

 

100.0%

 

 

 

 

 

 

 

Global Market Weighted Index Benchmark

 

 

 

 

MSCI ACWI IMI Net Divs

 

6.40%

 

 

 

MSCI All Country World Index

 

 

 

 

 

Investable Market Index

 

 

 

 

 

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