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Wilshire Wonders The U.S. stock market—writ large—has finally recovered from the tech bubble. Only Dow Jones Wilshire 5000 hit a new all-time high on February 20, closing at 14,796.54. That finally topped the 14,751.64 mark set nearly seven years earlier, on March 24, 2000. Investors who bought the index on that day and held on ever since (God bless 'em) can now boast an annualized return of … well, nothing. But at least they are back above water. (If you reinvested dividends along the way and tracked the "total return index," you topped the March high back in September 2006. But the media loves the price-only figure, so the figure from the 20th is a triumph nonetheless.) Case-Shiller Goes National First it was 10 cities. Then 20. Now, the S&P/Case-Shiller Home Prices Indices have gone national. The real estate indexing partnership announced this week that it would create a "National" version of its popular U.S. home price indexes. Previously, the group ran indexes for 20 metropolitan areas, and combined those into 10- and 20-city pseudo-national composites. Now, it will look at truly national trends as well. The new index will be updated quarterly. The data show that U.S. home prices fell in the third quarter of 2006 for the first time since Q4 1996. Prices in Q3 dropped 0.75 percent. Still, they remain more than double what they were in 1999, and triple the level of 1987. The new indexes put the lie to the notion so often asserted by real estate brokers that home prices never fall on a national basis. There have been quite a few quarters when prices fell nationwide, and prices fell on an annual basis in 1990, dropping three-quarters of a percent. S&P Buys Into Commodities Boom Goldman Sachs has sold the Goldman Sachs Commodity Index (GSCI) to Standard & Poor's (S&P). Terms of the agreement were not disclosed. After a brief transition period, the index will be renamed the S&P GSCI Commodity Index. S&P will retire its own commodity indexes, which launched recently and have yet to gain much traction. Goldman Sachs has been selling off bits of its index business over the past year, and with the sale of GSCI has effectively left the business. The GSCI, created in 1991, is the most popular commodity index, tracked by an estimated $60 billion to $100 billion, most of it in over-the-counter derivatives. Several ETFs based on both the main GSCI index and certain variants are traded in both the U.S. and Europe. In addition to the GSCI, the deal includes two families of lesser-known equity indexes, including Goldman's sector indexes. New Europe, New Dividends Dow Jones STOXX launched a new dividend index tied to the performance of the 15 highest-yielding stocks in the 12 so-called "new Europe" countries: Bulgaria, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia and Slovenia. Those are, if you're not keeping track, the 12 countries that joined the European Union in May 2004. Dow Jones expects the new STOXX EU Enlarged Select Dividend 15 Index to serve as the basis for investable products. The index is weighted by dividend yield, and at launch enjoyed a hefty 4.85 percent yield. Investors Eye Global Property Investors Eye Global Property S&P has launched a new Global Property index. The S&P Global Property 40 Index, which debuted January 24, tracks 40 large-cap real estate companies from across the global markets. The index is a subset of the broader S&P/Citigroup Global Property Index, which features more than 400 stocks from developed and emerging markets. With a focused list of 40 names, the new index seems custom-designed for the ETF marketplace. Past As Prologue Here's proof that past performance is no guarantee of future results. Over the five years ending December 31, 2006, just 13 percent of large-cap funds and 10 percent of small- and mid-cap funds maintained a top-half ranking from year to year. What's worse, just 3 percent of large-cap funds, 2.5 percent of mid-cap funds and zero (!) small-cap funds maintained top-quartile performance. "Standard & Poor's research suggests that screening for top-quartile funds, as the sole basis for an investment decision, is inappropriate," says Srikant Dash, Index Strategist at S&P. |
