Performance Year-To-Date {Total Return}

We continue today our year-to-date performance review covering different parts of the market based on our own portfolio programs and overall asset allocation process.  Today we're taking a look at various ETFs we have in our total return strategies.  Again these results are  through October 4th 2017.  You can click on both charts  if you want to make  them larger.  Performance chart is from Stockcharts.com, although the ETF selection is my own.  Also I believe the performance data shown above does not include dividends.  If I am correct then the total returns on these indices is actually better than what is shown above.

If international investments have been carrying the performance torch this year than strategies based on total return have been the laggard.  This should not be surprising as dividend and interest related investments often underperform in the face of rising interest rates.  Also many of these ETFs had done better than the overall market coming into 2017 so a period of outperformance by more broad based and growth oriented investment was at some point going to occur.   I'd also note that in most years the current return on these assets would be considered pretty decent.  However,  their return looks a bit subdued when compared to some of the higher flying areas of the markets.

No place can this be seen more broadly than in REIT assets or Real Estate Investment Trusts.  No is not a time to go into REITs in particular but just understand that higher interest rates hurt REITs because it raises their borrowing costs.  To compensate of course REITS have much higher dividend yields so it can pay to wait.

Another way to see the impact of higher interest rates is to view the performance of certain bond ETFs below.  Higher rates hurt these just like they do the overall return of regular bonds.  The exception of course is that bonds have a maturity date whereas funds do not.

*Long in client and personal accounts in some manner the indices listed above with the exception of the fixed income ETFs.  These are shown for illustrative purposes only.  Positions can change at any time without notice on this blog or via any other form of electronic communication.