Magic Formula Investing 2010 Year In Review [View instapost]
The Magic Formula portfolio has a strong bias towards small and microcap stocks. It would be interesting to see these results compared to indices that reflect the market cap bias in the portfolio. For CY 2010, here are returns that suggest much of the MFI outperformance was driven by it's SMID bias:
Return Ticker ETF 15.1% SPY SPDR S&P 500 Index 26.7% IJH iShares S&P MidCap 400 Index 26.6% IJR iShares S&P SmallCap 600 Index 29.6% IWC iShares Russell Microcap Index
While the time frame covered in the article does not exactly match CY10, these returns suggest investors likely would have been better off with their money in a small, mid or micro cap ETF than in MFI last year.
Magic Formula Investing 2010 Year In Review [View instapost]
Return Ticker ETF
15.1% SPY SPDR S&P 500 Index
26.7% IJH iShares S&P MidCap 400 Index
26.6% IJR iShares S&P SmallCap 600 Index
29.6% IWC iShares Russell Microcap Index
While the time frame covered in the article does not exactly match CY10, these returns suggest investors likely would have been better off with their money in a small, mid or micro cap ETF than in MFI last year.