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The only thing flatter than the S&P 500 returns during December were the overall returns for the index for the full year of 2011. The major benchmark for U.S. equities finished December with only a 0.85% change to the upside while for the year the index finished only 4 hundredths of a point lower than the 2010 close. Dividends included, the total return for the S&P 500 for 2011 came in at a measly 2.11%.

To get a better idea of what comprises that 2.11% return, below are the annual returns for each sector:

December and Annual Total Returns by Sector

Sector Name December Return 2011 Return
Healthcare + 3.61% + 15.42%
Consumer Defensive + 1.69% + 11.42%
Utilities - 0.24% + 5.59%
Energy - 0.68% + 3.75%
Communication Services - 0.31% + 3.74%
Technology - 1.71% + 1.71%
Real Estate + 2.43% + 1.54%
Consumer Cyclical - 1.25% + 0.76%
Industrials - 0.21% - 2.55%
Financial Services - 0.20% - 14.37%
Basic Materials - 4.22% - 16.36%

Believe it or not there was a sector worse than the financials as basic material stocks surpassed the losses of financials by almost 2%. On the other side of the coin, 2011 saw Healthcare as the strongest performing sector which reversed course after having a greatly underperforming 2010. The sector likely benefited as focus within the government shifted from healthcare reform to financial reform.

Looking forward to 2012, I am looking for the Utilities, Real Estate and Industrials sectors to lead U.S. equities higher. I believe the positive signs shown by the housing economic indicators towards the end of the year will be the first in a series of signals letting investors know growth will return in 2012.

Disclosure: I am long MS, CSTR, VLO, F, DIG, HOG, DHF.

Source: December 2011 Fund Performance By Asset Class