[This article previously appeared on IndexUniverse.eu.]

For equity investors, the decade of the “noughties” must have seemed like a roller-coaster ride too far. Two precipitous falls in share prices and a major bull market in the middle of the period combined to leave most investors out of pocket, even if they had done nothing to their benchmark portfolios.

But, at the index level, which sectors contributed most and least to the negative return from shares during the ten-year period, and how did the composition of capitalisation-weighted benchmarks change? And are there any conclusions to be drawn for passive investing as a result?

The commonly used Eurozone blue chip equity index, the Dow Jones Euro Stoxx 50, gave a price return of -38.86% over the decade. The broader Dow Jones Stoxx 600 index, which consists of 19 industry “supersectors” (and includes non-Eurozone markets such as the UK) returned -32.78% over the period.

Dividends will have mitigated these losses somewhat (even if at the start of the period European equity yields averaged a miserly 1.7%), but for equity investors at the start of the decade capital appreciation was the name of the game and on that score company shares failed dismally as an investment.

In the US market, similar trends prevailed. Rob Arnott and John West of Research Affiliates stated the bald facts in a recent article on IndexUniverse.com: “The ‘naughts’ were the worst decade ever for U.S. equity investors, even after an astounding rebound in the past 10 months of 2009, during which the S&P 500 Index surged 55%.”

What contributed to the poor returns? A look at the top ten constituents of the capitalisation-weighted DJ Euro Stoxx 50 at the beginning and end of the decade gives a hint.

DJ Euro Stoxx 50 Top Ten Components, 31 December 1999

DJ Euro Stoxx 50 Top Ten Components, 31 December 2009

Previous Page

1  |  2  |  3

Next Page