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NOTE: This post is part of an ongoing education series. This information is for educational purposes only. This information does not constitute investment advice. Please consult with your financial advisor before taking any action. For planning advice contact Polaris Financial Planning.

Every year I take a long look at how different segments of the US stock market are doing.  Below is the historical performance of 6 US stock market segments.  This is one of the tools I use to create / balance investment portfolios.  This data is based on Vanguard Index Funds.  One must always remember – Past performance does not guarantee future results.

US Market Matrix as of 12/31/14

12-Month Return 3-Year Average 5-Year Average 10-Year Average
Large Growth Average 13.38 20.41 15.48 8.00
Large Value Average 13.48 20.15 14.96 7.30
Mid-Cap Growth Average 13.35 20.12 16.53 9.29*
Mid-Cap Value Average 13.84 21.94 17.04 9.46*
Small Growth Average 3.88 18.98 16.72 9.41
Small Value Average 10.39 21.31 16.39 8.32

* Based on index data provided at Vanguard.com

For reference here is the returns for the total market index.

12-Month Return 3-Year Average 5-Year Average 10-Year Average
Total Stock Market Return 12.56 20.49 15.70 8.10

I use the top table as a contrarian indicator.  The better one of the segments has done and the longer it has exceeded the long term average, the less desirous it is.  Conversely, large under performance over a long period of time MAY indicate a buying opportunity within that given segment.  You can also use this as a guide to check the performance of your portfolio.  If the US stock segment of your investments have returned 7% per year for the last 5 years – you may have a problem.

All six US segments are UP over all time periods shown above.  You will also notice that except for the last 12 months, the results are fairly even.  I do not place much value on single year variations but the significant under performance of the Small Growth Segment in the last year is interesting.  Over the last 10 years the Large Value Average is trailing the other segments.  I see this as a very mild contraction indicator.  Based on just this table, I would be temped to slightly increase the weighting I give to that segment of the US Stock Market.

If you would like more information or specific advice on your portfolio please contact Polaris Financial Planning.