Income investor dashboard 2011 performance

2011 was definitely a wild and wacky year for investments. Volatility and uncertainty returned to the markets with a vengeance. In my mind, 2011 was the year of the contrarian in spades. Usually being contrarian pays off handsomely but 2011 delivered in that regard more than usual. Can you remember back to Dec 2010 what the ‘consenus’ was on US treasuries, US markets vs foreign markets, and muni bonds? Well, those were all among the best performing asset classes of 2011. Lets jump in and take a look at the income investor dashboard performance for 2011 which will illustrate this divergence versus the consensus.

The 2011 total return (price appreciation plus dividends) for the income investor dashboard is shown below. I’ve highlighted positive returns in green.

Let me start from the bottom. To play on an old saying, in 2011 bonds had more fun. Much more. Long terms bond, the TLT ETF, led the way with a stellar 33.6% total return. Wait, don’t let your jaw drop yet. It gets better. I don’t track them here but long term zero coupon government bonds, the EDV ETF, gained over 50% for the year! Next up for bonds was a great performance turned in by muni bonds, MUB /HYD, and muni bond CEFs, BFK was my proxy for them. All I have to say is thank you to Meridith Whitney. See my Jan 201 post on munis here. Maybe I’ll send her a belated Xmas present. Corporates, high yield, and the overall bond market did quite well also and would have handily beaten many stock related investments as well with a lot less sleepless evenings. Now lets turn to stocks.

As for the major WW stock indices the US markets turned out to be the least bad block in the neighborhood. The SPY managed to eek out a positive return thanks to dividends. On a price only basis it was slightly down for the year. Europe and the emerging markets we absolutely atrocious and individual country stocks like China, Hong Kong, Australia didn’t fare any better. Again so much for the consensus calls in 2010. Even the all world index, ACWI, was down almost 8% for the year.

US dividend stocks, especially large caps, had a banner year. DVY, SDY, VYM were all nicely up for the year. And utilities, which are essentially a large cap dividend play, led the way in the dividend world and were actually the best performing US stock sector of 2011 with an almost 20% return. The MLP sector also did quite well with a nice tax deffered return of about 9% for the year. But dividends couldn’t save every sector. International dividend stocks, the IDV ETF, couldn’t overcome the Euro headwinds and even traditional US dividend sectors like mREITs, telecoms, and preferred shares had rough years for various reasons.

For 2012 I’m going to have some additions and deletions to the dashboard. I’m only going to track investable products from now on instead of tracking things like the 10 yr note or the AMZ index which doesn’t include fees. I’ll also try and fill out some of the bond ETF offerings. Any other suggested additions or deletions would be appreciated.

Well, that’s it for the 2011 dashboard performance. I’ll now turn my attention to portfolio performance for 2011 and look at choices such as the standard 60/40 stock bond allocation, the IVY timing portfolio which I’m so fond of, and of course my personal portfolio performance. I’ll also offer some macro and valuation thoughts for 2012.