How did Dow beat up on VOO and VTI?

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golfallday
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How did Dow beat up on VOO and VTI?

Post by golfallday »

Looks like Dow Index is going to beat the hyper-diversified SP500 Index and Total US Index by almost 6%. What gives? Is it there are just many more banks in the latter 2 which was a huge drag? All 3 indexes have a substantial international footprint, so that can't account for the 6% difference. I know many consider the Dow a useless index...I wish I was up 6% this year. Happy and healthy New Year to all. Cheers!
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Sammy_M
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Re: How did Dow beat up on VOO and VTI?

Post by Sammy_M »

golfallday wrote:Looks like Dow Index is going to beat the hyper-diversified SP500 Index and Total US Index by almost 6%. What gives? Is it there are just many more banks in the latter 2 which was a huge drag? All 3 indexes have a substantial international footprint, so that can't account for the 6% difference. I know many consider the Dow a useless index...I wish I was up 6% this year. Happy and healthy New Year to all. Cheers!
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FredPeterson
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Re: How did Dow beat up on VOO and VTI?

Post by FredPeterson »

The Dow, as an index, is up 6.1% but with dividend reinvestment its up 8.8%
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golfallday
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Re: How did Dow beat up on VOO and VTI?

Post by golfallday »

I get that small caps and financials were a drag on VTI; but, SP500 Index is all mega-caps. More financials in VOO that were a drag? DIA just crushed VOO.
FinanceFun
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Re: How did Dow beat up on VOO and VTI?

Post by FinanceFun »

golfallday wrote:I get that small caps and financials were a drag on VTI; but, SP500 Index is all mega-caps. More financials in VOO that were a drag? DIA just crushed VOO.

DIA is price weighted. So a stock at $100 (IBM) is 10x the weight of a stock $10 (BAC). The banks of the dow started the year with low stock prices relative to companies like IBM, MCD, PG etc... Its an odd way of weighting an ETF, but does add a "randomness" that could out perform other large cap etf's.... of course it could also underperform.

That said, the DOW did not outperform the S&P by the amounts you mentioned. DIA out performed traditionally weighted large cap ETF's.
Last edited by FinanceFun on Tue Jan 03, 2012 7:42 am, edited 1 time in total.
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Ice-9
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Re: How did Dow beat up on VOO and VTI?

Post by Ice-9 »

I'd consider a one-stock index to be a worthless index too, but it sure would have been nice to have been 100% Lorillard, Inc in 2011. :)

http://quote.morningstar.com/stock/char ... l%5D%7D%7D
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bertilak
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Re: How did Dow beat up on VOO and VTI?

Post by bertilak »

The DJIA and the S&P500 indexes are different indexes so it is no surprise that their performances differed.
  • One difference is that they track two different (but overlapping) sets of stocks. The DJIA has 30 stocks and the 500 in S&P500 means 500 stocks.
  • Another difference is that the DJIA is price-weighted and the S&P500 is cap-weighted so even if they had exactly the same set of stocks their performance would still be different since they would have them in different proportions.
What would need explaining would be if they had the SAME results!
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golfallday
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Re: How did Dow beat up on VOO and VTI?

Post by golfallday »

Thanks for explaining the differences in outcomes.
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kenyan
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Re: How did Dow beat up on VOO and VTI?

Post by kenyan »

The S&P 500 certainly isn't 'all mega-caps,' either. In fact it contains the spectrum of large-caps and some mid-caps (by most measures).
Retirement investing is a marathon.
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