Portfolio Performance Comparison (as of 2/18/2013)

Ticker/Portfolio NameSince 3/31/1993Since 3/31/1993 SharpeYTD
Return**
1Yr AR3Yr AR5Yr AR10Yr AR10Yr Sharpe
VDIGX6.7%29.9%6.7%13.3%13.4%6.8%10.4%49.6%
VTSMX7.18%24.7%7.3%15.0%14.3%5.3%9.3%36.1%

*: NOT annualized

**YTD: Year to Date

3/31/1993: the earliest date that VDIGX had a price. 

See more detailed year by year comparison >>

  • They have better risk adjusted returns or Sharpe ratio. This is because with regularly paying dividend streams, dividend funds are more steady in terms of their total returns. This is evident in the above table, in fact, for both the last 5, 10 years and since 3/31/1993. 
Furthermore, when a portfolio is constructed with dividend funds instead of general stock funds, the portfolio usually has better risk adjusted returns (Sharpe ratio). This is obvious for a Strategic Asset Allocation  based portfolio, but it is also true for Tactical Asset Allocation. The intuition behind this is that dividend funds exhibit more stable trend than broad base index funds, mostly due to their steadier returns. 
The following shows how the model portfolios of   Retirement Income ETFs  (a plan consisting of mainly dividend paying stock funds and various bond funds) have compared with their counter parts in the other two plans: 

Portfolio Performance Comparison (as of 2/15/2013)

Ticker/Portfolio Name1 Week
Return*
YTD
Return**
1Yr AR1Yr Sharpe3Yr AR3Yr Sharpe5Yr AR5Yr Sharpe10Yr AR10Yr Sharpe
MyPlanIQ Diversified Core Allocation ETF Plan Strategic Asset Allocation – Optimal Moderate0.0%2.4%8.3%108.1%10.9%96.5%6.4%40.0%9.8%69.0%
MyPlanIQ Diversified Core Allocation ETF Plan Tactical Asset Allocation Moderate0.0%1.7%10.3%158.5%9.2%91.0%7.9%73.2%10.7%94.1%
Retirement Income ETFs Strategic Asset Allocation – Optimal Moderate0.1%2.2%9.9%148.8%11.4%114.0%6.5%40.8%8.1%57.6%
Retirement Income ETFs Tactical Asset Allocation Moderate0.3%1.9%8.3%134.7%11.9%122.4%7.8%72.2%11.7%99.9%
Six Core Asset ETFs Strategic Asset Allocation – Optimal Moderate-0.0%2.2%7.8%99.2%9.6%82.8%4.6%26.3%7.5%48.2%
Six Core Asset ETFs Tactical Asset Allocation Moderate-0.0%0.9%6.8%118.9%7.3%72.3%7.3%67.3%10.4%86.8%

*: NOT annualized

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