It is about time to pick stocks for 2014 (we time it to the “back to school” end of summer so that the beneficiaries get time to earn their $500 so that we can match them) and I spent a bit of time looking at performance for all the funds (as one consolidated entity) vs. the market.
The first item of note is that it has gotten exponentially easier to do any sort of analysis with all of the free tools available on the web and the graphing and analytical tools that you get from your brokerage account (they vary, but all are likely powerful). What used to take hours can essentially be done in minutes.
In addition, the tools and analytics are smarter in that they (usually) attempt to take into account dividends and remove net investment from the equation (i.e. if you contribute “new money” this doesn’t show up as part of your return). Not all the indexes take dividends into account, however, so you need to be careful. In this analysis SPY is the ETF for the S&P 500 which does include dividends. The second ETF is for VXUS, the Vanguard ETF for non-US stocks. Since we attempt to offer a mix of US and non-US stocks, the return “benchmark” in the simplest sense is about half way between SPY and VXUS.
By this measure it would seem that our target benchmark performance for the year would be about 15%.
In the last year our return has been 22.9% (the 12.9% is the 5 year return). Thus we have done pretty well, in total across the six funds, for the last year. Every fund, however, fares differently as a result of the stocks that they’ve selected over the years and what has been retained and what has been sold.