Sunday, January 01, 2017

1980 - 2016 Stock Market Returns for Various Indices

The chart shown below (click on the chart for a larger view) illustrates total returns for small cap indices (Russell 2000, Russell 2000 Value, and Russell 2000 Growth), large cap indices (S&P 500, S&P/Citi 500 Value, and S&P/Citi 500 Growth), a broad-based foreign stock index (Morgan Stanley Capital International Index for the developed stock markets of Europe, Australasia, and the Far East ("MSCI EAFE index")), an index of bonds (Barclays Capital Aggregate Bond Index)*, and the Nasdaq Composite Index**.

2016 was a decent year for stock market indices, most of which rebounded from subpar returns during 2015.  Most of the indices dropped during early 2016 and then remained relatively flat until Donald Trump won the 2016 U.S. Presidential election as investors were optimistic about a pro-business Presidential administration and a Republican-controlled Congress.  Tax cuts, a lowered bar for repatriation of foreign retained earnings, reduced business regulations, and a likely repeal of Obamacare sent the markets soaring higher during the last 7 weeks of 2016.

Of the indices shown in the chart below, small caps and value led the way, with the Russell 2000 Value Index rising 31.74%, the Russell 2000 Index rising 21.31%, and the S&P/Citi 500 Value Index rising 17.40%.  Foreign stocks continued their struggles of recent years, with the MSCI EAFE Index experiencing its third consecutive year of subpar returns, rising just 1.0%.  Bonds also under-performed, with the Barclays Capital Aggregate Bond Index rising a mere 2.65%.

As shown in the chart below, the Russell 2000 Value Index provided the strongest returns by far between 1980 and 2016, returning a total of 8,383%, an annualized return of about 12.75% per year. The total return of the Russell 2000 Value Index since December 31, 1979 is more than 2,800% greater than the total return of the next best index tracked below, the S&P 500 Index.

* The Barclays Capital Aggregate Bond Index was known as the Lehman Brothers Aggregate Bond Index prior to 2008.
** The Nasdaq Composite Index returns include annual price increases in the Index for 1980-2009 and total returns (accounting for reinvested distributions) for 2010-2016.  I have not been able to obtain total returns for the Nasdaq Composite for calendar years prior to 2010.