By JLP | February 1, 2007
Some of you are probably bored to death with all my postings about indexes and index fund returns. I promise that we are getting to the end of these posts. I have to tell you, I LOVE this kind of stuff. I love numbers. And the more I dive into this stuff, the more I’m convinced that the keys to a good portfolio are”
1. Prudent diversification
2. An asset allocation strategy based on your needs
3. Rebalancing when things get out of whack.
Earlier this week I posted the Dow Jones Total Market Index Sector Performance for 1992 – 2006. This was the performance of the actual index sectors, which to my knowledge weren’t available for people to invest in until iShares came along and started offering the ten sectors as exchange-traded funds in the summer of 2000. Below are the total returns for the ten sectors of the Dow Jones Total Market Index along with the Total Market Index Fund (IYY) which includes all ten sectors:
One thing I found quite aggrevating when calculating these numbers is that some of them are off by ONE BASIS POINT! For instance, iShares shows that IYZ had a total return of 32.37% for 2006, while I came up 32.38%. It’s not that big of a deal, but it drives me nuts that they don’t match exactly (see, I really am a perfectionist). I plan on doing a couple more follow-up posts analyzing these numbers and showing you how a portfolio of these funds would have performed. I’ll also get the numbers for the iShares fixed income ETFs so that we can see what impact it would have had on the portfolio.