Morningstar Style Returns

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Taylor Larimore
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Morningstar Style Returns

Post by Taylor Larimore » Wed Mar 13, 2019 3:45 pm

Bogleheads:

Below are Morningstar Style Returns (annualized) for various periods ending 03/12/2019:

Style ................... 1 Year.....3 Years.....5 Years

US Market..............2.16%......13.7%......10.21%
US Large Cap ......... 2.46.......14.05.......10.83
US Mid Cap ............0.98.......11.56........ 8.66
US Small Cap ........ -0.92.......12.48 ........6.91
US Small Cap Value. -3.71.........8.81........5.25

Lesson Learned: Own total market index funds and you will never underperform the market.

http://news.morningstar.com/index/indexReturn.html

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

rkhusky
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Re: Morningstar Style Returns

Post by rkhusky » Wed Mar 13, 2019 4:25 pm

I hadn't realized that Small Value was doing that poorly compared to the US Market over the last 5 years. Wonder what level of out-performance it will need over the next 5 years to catch back up? edit: looks like about 5% per year to catch up.

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Taylor Larimore
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SPIVA

Post by Taylor Larimore » Thu Mar 14, 2019 12:31 pm

rkhusky wrote:
Wed Mar 13, 2019 4:25 pm
I hadn't realized that Small Value was doing that poorly compared to the US Market over the last 5 years.
rkhusky:

The Bogleheads Forum is supposed to reflect "The Wisdom of Jack Bogle" who invented total market index funds. Sadly, there are many posters who have been taught by the profit-seeking investment industry to believe that they can beat the market.

The SPIVA Reports shows conclusively that most investors do not beat the market, and those that do will not persist.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

Forester
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Re: Morningstar Style Returns

Post by Forester » Fri Mar 15, 2019 9:30 am

13/03/2009 to today

S&P 500 +353%
US small cap value +408%

The longer the timeframe, the greater the outperformance of SCV

DB2
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Re: Morningstar Style Returns

Post by DB2 » Fri Mar 15, 2019 9:15 pm

Forester wrote:
Fri Mar 15, 2019 9:30 am
13/03/2009 to today

S&P 500 +353%
US small cap value +408%

The longer the timeframe, the greater the outperformance of SCV
Small cap growth I heard is even larger over the last 10 years.

But I agree about total market funds.

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aspirit
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Re: Morningstar Style Returns

Post by aspirit » Fri Mar 15, 2019 10:11 pm

Iirc, someone/a regular poster here said they’d heard or witnessed the inception of the M* box design paradigm way back when it was configured on the back of a resteraunt/ bar room napkin :)
/shrug /
Time & tides wait for no one. A man has to know his limitations. | "Give me control of a nation's money and I care not who makes it's laws" | — Mayer Amschel Bauer Rothschild ~

Elric
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Re: Morningstar Style Returns

Post by Elric » Fri Mar 15, 2019 11:25 pm

Taylor Larimore wrote:
Wed Mar 13, 2019 3:45 pm
Below are Morningstar Style Returns (annualized) for various periods ending 03/12/2019:

Style ................... 1 Year.....3 Years.....5 Years

US Market..............2.16%......13.7%......10.21%
US Large Cap ......... 2.46.......14.05.......10.83
US Mid Cap ............0.98.......11.56........ 8.66
US Small Cap ........ -0.92.......12.48 ........6.91
US Small Cap Value. -3.71.........8.81........5.25

Lesson Learned: Own total market index funds and you will never underperform the market.
Looking only at the data posted, isn't the lesson that Large Cap consistently outperforms total market? Now I know the data is too limited and that's not a valid conclusion in general, but for the data provided, that's the fact.
It's still true that "Own total market index funds and you will never underperform the market" because the statement is a simple tautology, as is "own total market index funds and you will never outperform the market." Those statements don't convey information and have nothing to do with the posted results.

klaus14
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Re: Morningstar Style Returns

Post by klaus14 » Sat Mar 16, 2019 2:26 am

Elric wrote:
Fri Mar 15, 2019 11:25 pm
Taylor Larimore wrote:
Wed Mar 13, 2019 3:45 pm
Below are Morningstar Style Returns (annualized) for various periods ending 03/12/2019:

Style ................... 1 Year.....3 Years.....5 Years

US Market..............2.16%......13.7%......10.21%
US Large Cap ......... 2.46.......14.05.......10.83
US Mid Cap ............0.98.......11.56........ 8.66
US Small Cap ........ -0.92.......12.48 ........6.91
US Small Cap Value. -3.71.........8.81........5.25

Lesson Learned: Own total market index funds and you will never underperform the market.
Looking only at the data posted, isn't the lesson that Large Cap consistently outperforms total market? Now I know the data is too limited and that's not a valid conclusion in general, but for the data provided, that's the fact.
It's still true that "Own total market index funds and you will never underperform the market" because the statement is a simple tautology, as is "own total market index funds and you will never outperform the market." Those statements don't convey information and have nothing to do with the posted results.
i guess the lesson is any subset of the total market can underperform (or over perform) the total market in any time window. almost a tautology. So with the total market your expected return is the same but your risk is lower than any subset.

some people are annoyed that Taylor posts the same mantra again and again but I am happy he is doing it. Because that is what 99% of the people needs.

SoonerD
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Re: Morningstar Style Returns

Post by SoonerD » Sat Mar 16, 2019 4:27 am

Elric wrote:
Fri Mar 15, 2019 11:25 pm
Taylor Larimore wrote:
Wed Mar 13, 2019 3:45 pm
Below are Morningstar Style Returns (annualized) for various periods ending 03/12/2019:

Style ................... 1 Year.....3 Years.....5 Years

US Market..............2.16%......13.7%......10.21%
US Large Cap ......... 2.46.......14.05.......10.83
US Mid Cap ............0.98.......11.56........ 8.66
US Small Cap ........ -0.92.......12.48 ........6.91
US Small Cap Value. -3.71.........8.81........5.25

Lesson Learned: Own total market index funds and you will never underperform the market.
Looking only at the data posted, isn't the lesson that Large Cap consistently outperforms total market? Now I know the data is too limited and that's not a valid conclusion in general, but for the data provided, that's the fact.
It's still true that "Own total market index funds and you will never underperform the market" because the statement is a simple tautology, as is "own total market index funds and you will never outperform the market." Those statements don't convey information and have nothing to do with the posted results.
I disagree with your retort. The tautology does convey information, important information. And the data does illustrate the tautology and therefor has something to do with the tautology.

It may be obvious to many and seem unnecessary to some; but it is important information of which the vast majority of investors, advisors and asset management marketing departments personnel are fully, and often willfully, ignorant.

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vineviz
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Re: Morningstar Style Returns

Post by vineviz » Sat Mar 16, 2019 6:18 am

klaus14 wrote:
Sat Mar 16, 2019 2:26 am
some people are annoyed that Taylor posts the same mantra again and again but I am happy he is doing it. Because that is what 99% of the people needs.
Taylor provides a great deal of valuable service to the investment community, and he should be commended for it.

I just find it disappointing that posts like this have to be part of the package deal.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

Elric
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Re: Morningstar Style Returns

Post by Elric » Sat Mar 16, 2019 9:13 am

vineviz wrote:
Sat Mar 16, 2019 6:18 am
Taylor provides a great deal of valuable service to the investment community, and he should be commended for it.

I just find it disappointing that posts like this have to be part of the package deal.
+1

nix4me
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Re: Morningstar Style Returns

Post by nix4me » Sat Mar 16, 2019 9:29 am

Taylor Larimore wrote:
Wed Mar 13, 2019 3:45 pm
Bogleheads:

Below are Morningstar Style Returns (annualized) for various periods ending 03/12/2019:

Style ................... 1 Year.....3 Years.....5 Years

US Market..............2.16%......13.7%......10.21%
US Large Cap ......... 2.46.......14.05.......10.83
US Mid Cap ............0.98.......11.56........ 8.66
US Small Cap ........ -0.92.......12.48 ........6.91
US Small Cap Value. -3.71.........8.81........5.25

Lesson Learned: Own total market index funds and you will never underperform the market.

http://news.morningstar.com/index/indexReturn.html

Best wishes.
Taylor
What is learned by looking at those numbers is that Large Cap has outperformed the other listed categories over the last 5 years.

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vineviz
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Re: Morningstar Style Returns

Post by vineviz » Sat Mar 16, 2019 5:43 pm

Taylor Larimore wrote:
Wed Mar 13, 2019 3:45 pm
Lesson Learned: Own total market index funds and you will never underperform the market.
In case anyone is interested in seeing a longer time period as reflected by actual index funds (iShares ETFs, except Vanguard's VTI), as opposed to category averages:

Style..............................1 year...........3 years.......5 years........7 years.......10 years.......15 years
Total Stock Market................7.74%........8.07%.......7.98%.........7.50%.........7.36%...........7.75%
S&P 500 Large Cap...............7.28%........7.63%.......7.58%..........7.09%.........6.91%...........7.33%
S&P 400 Mid Cap..................9.79%......10.01%........9.77%..........9.32%........9.41%...........9.60%
S&P 600 Small Cap..............10.53%.......10.62%......10.10%.........9.51%.......9.48%..........10.07%
S&P 600 Small Cap Value.....10.21%......10.20%........9.58%.........8.91%.........8.82%...........9.55%

https://www.portfoliovisualizer.com/bac ... ion4_3=100
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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DG99999
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Re: Morningstar Style Returns

Post by DG99999 » Sat Mar 16, 2019 11:57 pm

vineviz wrote:
Sat Mar 16, 2019 5:43 pm
Taylor Larimore wrote:
Wed Mar 13, 2019 3:45 pm
Lesson Learned: Own total market index funds and you will never underperform the market.
In case anyone is interested in seeing a longer time period as reflected by actual index funds (iShares ETFs, except Vanguard's VTI), as opposed to category averages:

Style..............................1 year...........3 years.......5 years........7 years.......10 years.......15 years
Total Stock Market................7.74%........8.07%.......7.98%.........7.50%.........7.36%...........7.75%
S&P 500 Large Cap...............7.28%........7.63%.......7.58%..........7.09%.........6.91%...........7.33%
S&P 400 Mid Cap..................9.79%......10.01%........9.77%..........9.32%........9.41%...........9.60%
S&P 600 Small Cap..............10.53%.......10.62%......10.10%.........9.51%.......9.48%..........10.07%
S&P 600 Small Cap Value.....10.21%......10.20%........9.58%.........8.91%.........8.82%...........9.55%

https://www.portfoliovisualizer.com/bac ... ion4_3=100
You should probably make it more clear that you have posted the Average Rolling Returns for the period selected (i.e. 2000-2019 in your link). So in the three year column in your table, the return is the average of the 16 discrete three year periods that can be found in that data set - this is best illustrated by reviewing the graph(s) on the tab from which you took the data. Similarly, the five year column is an average of the 14 discrete five year periods (i.e. ending in 2005. 2006 . . . 2019). While these data may or may not support your premise, the comparison to Taylor's data is apples to oranges - so that needs to be made clear. What you posted is not the past 1,3,5,7,10, and 15 year annualized returns to date.
I am not a financial professional. My posts are only my opinion on the topic. You need to do your own due diligence and consult with a professional when addressing your financial questions.

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Taylor Larimore
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Re: Morningstar Style Returns

Post by Taylor Larimore » Sun Mar 17, 2019 2:34 pm

Bogleheads:

I posted a response here.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: Morningstar Style Returns

Post by tennisplyr » Sun Mar 17, 2019 6:13 pm

Remember, at the end of the day, you make you're own decisions...it's your life....no one is walking in your shoes. I listen to respected contributors and then make my own decisions.
Those who move forward with a happy spirit will find that things always work out.

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