Last Updated Jan 1, 2011 2:29 PM EST
It was another good year for global capitalism. The US turned in stronger returns than the rest of the globe, and here are the numbers. Rather than selecting narrow indexes as measures of stock market returns, I selected the broadest measures of total stock market returns, with the help of Matt Hougan, president of ETF Analytics and Global Head of Editorial at IndexUniverse.
US Stock Market Returns
US stocks clocked in a total return of 17.9 percent, as measured by the Wilshire 5000 index, the broadest measure of US stocks. Having an edge in capturing the total returns of the US Stock Market came from owning index funds such as the Vanguard Total US Stock Market Fund (VTSAX), which turned in a 17.3 percent return. This fund bested 88% of US stock funds in 2010, and 73 percent of US stock funds over a ten year period.
By contrast, the S&P 500 total return was only 15.1 percent. The S&P 500 comprises about 75 percent of the US stock market, so the fact that the broader market bested the S&P 500 by 2.9 percentage points illustrates the relative strength of mid and small cap stocks this year. The 15.1 percent total return for the S&P 500 is comprised of 12.8 percentage points from price appreciation, and 2.3 percentage points from dividends and reinvestment of those dividends.
Forget about all that doom and gloom you may have been hearing at holiday parties. US stocks have been on a tear since the 2008 stock market crash and are now only 4.4 percent behind the record 2007 year-end close, and 10.0 percent below the all-time high of the stock market on October 9, 2007.
International Stock Market Returns
International stocks also fared well, though not quite as well as US Stocks. The MSCI All-World Ex-US Investable Market Index turned in total returns of 13.2 percent, measured in US dollars. This index captures returns of all stocks in all countries except the US. According to MSCI, the 13.2 percent total return is comprised of emerging markets returning 20.2 and developed markets, dominated by Western Europe and Japan, returning only 9.7 percent.
Global Stock Returns
Returns across the globe, a combination of US and international stocks, returned 14.9 percent as measured by the MSCI All World Investable Market Index.
While the global financial crisis continues to be devastating to world economies, world stock markets seem to have nearly recovered.
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