Updated Couch Potato report card

Last week I announced the 2012 returns for my model portfolios. Now it’s time to present the updated longer-term returns of the portfolios, with data provided by Justin Bender. This information covers the 15 years from 1998 through 2012.

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by Dan Bortolotti
January 16th, 2013

Online only.

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Last week I announced the 2012 returns for my model portfolios. Now it’s time to present the updated longer-term returns of the portfolios, with data provided by Justin Bender. This information covers the 15 years from 1998 through 2012:

Global Couch Complete Couch
Potato (ETFs) Potato Über-Tuber
1 year 8.07 8.71 9.01
3 years 5.57 7.67 6.22
5 years 2.62 4.76 4.00
10 years 5.49 7.54 6.86
15 years 4.77 6.66 6.06
Standard deviation 7.76 7.76 7.93

Note these returns use actual ETF performance wherever possible. However, none of the funds has a 15-year track record (a few have been around for less than five years). So we have filled in the gaps using index data, minus the MER of the relevant ETF. It’s certainly not a perfect measure (no backtest is perfect), but it’s a reasonable proxy. Full details are provided in the PDF document, which is also linked on the model portfolios page.

A few observations about these numbers:

  • As I’ve discussed before, start and end dates mean an awful lot. Unlike the returns for the decade ending in 2010, the 10-year returns now look quite good—so much for the “lost decade,” which only applies when your start date is during the tech wreck of 2000–01.
  • Five-year market returns are disappointing, since they start just prior to the disaster of 2008. But barring a terrible 2013, the next batch of five-year returns will probably look outstanding, since they start with 2009, one of the all-time best years for equities.
  • The Global Couch Potato lags the other two portfolios significantly over all periods longer than three years. This is largely because the last 15 years have seen strong returns in several asset classes that are absent in the Global Couch Potato: real-return bonds (9% annualized since 1998), Canadian REITs (13% since 1998), emerging markets (8.8% since 1999).

Dividend ETF webinar Thursday

On Thursday, January 17, at 11 a.m. EST, I’ll be participating in a webinar at ETF Insight. I’ll be joined by Vinit Srivastava of S&P Dow Jones Indices, Craig McGee of Morningstar CPMS, and moderator Yves Rebetez. The topic is Canadian dividend ETFs.

Specifically we’ll be looking at these ETFs tracking indexes from S&P Dow Jones and Morningstar:

iShares Dow Jones Canada Select Dividend (XDV)

iShares S&P/TSX Canadian Dividend Aristocrats (CDZ)

iShares S&P US Dividend Growers (CUD)

First Asset Morningstar Canada Dividend Target 30 (DXM)

First Asset Morningstar US Dividend Target 50 (UXM)

iShares Morningstar Dividend Yield Focus (XHD)

If you’re interested in learning more about dividend ETFs, I hope you’ll join us for the webinar.

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