The MarketGrader Indexes turned in another solid showing in 2011, particularly considering the market’s continued uncertainty and resulting volatility. Among all indexes the year’s best performer was the MarketGrader Health Care Index, which was up 17.18% in 2011, comparing very favorably to its benchmark, the Dow Jones US Health Care Index, up 9.44%. Since 2002 MG Health Care has had only one down year, when it lost 26.08% in 2008. This is reflected in its 3 and 5-year annualized returns of 17.13% and 5.45%, besting the benchmark’s 10.20% and 1.59% respectively. For our readers that aren’t MarketGrader.com subscribers yet, you may view the current components of the MarketGrader Health Care Index by clicking here. For all other index components, including the Barron’s 400, please take a free trial.
Two other notable performances among our sector indexes were attributed to the MarketGrader Consumer Staples Index, up 12.96% in the year and the MarketGrader Financials Index, up 2.30%. The latter might not seem like much but it’s impressive considering its benchmark, the Dow Jones US Financials Index lost 14.62% in 2011. MG Financials now sports a 3-year annualized return of 10.46% and a 5-year return of -6.41%, which of course includes 2007 and 2008 when it lost 17.77% and 35.22% respectively. The Dow Jones US Financials Index is up only 2.66% per year in the last three years and down 16.20% on a 5-year annualized basis, a full 10 percentage points below our index. In the case of our Consumer Staples Index its 3 and 5-year annualized returns are 18.70% and 5.00%, handily beating the Dow Jones US Consumer Goods Index, with annualized returns of 13.91% and 2.78% respectively in the equivalent periods.
The Barron’s 400 Index had a flat year, actually ending 2011 down 0.41%, essentially in line with the S&P 500. However, its 3-year annualized return, now that 2008 has fallen off the back of the calculation, is an impressive 19.30% compared to the S&P 500’s 11.66%. Who said money can’t be made in stocks anymore? On a 5-year basis, the Barron’s 400 is up 1.38% per annum, besting the S&P’s -2.38%. Among our Core indexes, who share the Barron’s 400 methodology, last year’s best performer was the MarketGrader 100 Index, up 1.83% for the year and 19.45% annually since 2009. It is worth noting that MG 100, MG 200 and the Barron’s 400 all beat the mutual fund Multi-Cap Core average in 2011 and certainly on a 3 and-5 year annualized basis. Active managers in the category lost, on average, 2.29% in 2011 while still being up 13.86% per year, on average, since 2009. This is an underperformance of almost 550 basis points relative to the Barron’s 400.
A stellar performance worthy of a stand-alone mention was turned in by the MarketGrader Mid-Cap 100 Index, which gained an impressive 8.77% in 2011, beating by a mile the S&P 400, which lost 3.01% and the average of all mutual funds in the mid-cap category, who collectively lost 3.57%. In the last three years the MarketGrader Mid Cap 100 is up an astounding 24.09% per year, compared to 17.77% and 16.95% for the two aforementioned benchmarks.
A thorough analysis of our performance last year isn’t complete without a mention of our laggards. Among them was the MarketGrader Small Cap 100 Index, which lost 3.22% while the S&P 600 Index lost 0.16%. If it’s any consolation (and it’s not,) the loss wasn’t as bad as the 3.75% average decline of all U.S. mutual funds in the small cap category. Among our sector indexes the MarketGrader Consumer Discretionary Index lost 0.22% while the Dow Jones US Consumer Services Index gained 5.50% and the MarketGrader Energy Index lost 3.81% while the Dow Jones US Oil & Gas Index gained 2.32%. In both cases the MarketGrader indexes are still beating their benchmarks on a 3 and 5-year basis.
The year’s worst underperformer was the MarketGrader Technology Index, which fell 10.50% compared to the Dow Jones US Technology Index’s loss of 0.83% and the tech-heavy NASDAQ Composite’s decline of 1.80%. However, MG Technology is still solidly in the black on a 3 and 5-year basis, up 20.14% and 4.20% per annum respectively.
Please click here for our complete 2011 MG Indexes Report Card. Happy investing in the New Year.