As important economic news (such as gold hitting $1,400 per ounce and the depreciating US dollar) rocked the headlines in 2010, its important to think about how these developments affected your investments. Let's take a look at how a couple of major indexes and index funds have performed since the beginning of the year to determine just how well these ETFs performed.

IN PICTURES: 20 Tools For Building Up Your Portfolio

Focus ETF Year to Date
U.S. Dollar PowerShares DB US Dollar Index Bullish
U.S. Equity SPDRS S&P 500 Index
Technology PowerShares QQQ
Europe, Australia-Asia iShares MSCI EAFE Index
Energy United States Oil
Precious Metals iShares Comex Gold Trust
Fixed Income iShares Barclays 7-10 Year Treasury (NYSE:IEF) +5.88%
Frontier Markets Market Vectors Africa ETF

The Market
The S&P 500 index, as tracked by the SPDRS S&P 500 Index fund, has fluctuated over the year; however, this fund did start to rise as the year was winding down. In the final quarter of 2010, the S&P 500 (as well as the DJIA) has seen a move of around 20% . (For a complete guide, check out our Index Investing Tutorial.)

Pullbacks and Producers
Gold futures prices, followed by the iShares Comex Gold Trust fund, have continued to trade at record highs. IAU has recently hit a new all time high of $13.97, which is about a 30% gain. The U.S. dollar index, followed by the PowerShares DB US Dollar Index Bullish fund was flat. Investors have sought out gold over US dollars as protectors against the uncertainty in the markets.

Technology has jumped since the beginning of the year as top PowerShares QQQQ fund holdings like Apple (Nasdaq:AAPL), Qualcomm (Nasdaq:QCOM) and Google (Nasdaq:GOOG) all continued to trade in positive territory.

Frontier Markets
It's interesting to note the performance of Frontier markets covered by funds like Market Vectors Africa ETF in comparison to traditional international investments covered by the iShares MSCI EAFE Index fund. Frontier markets include areas like South Africa, Nigeria and Morocco. Government corruption, hyperinflation and human rights abuses are a part of the story for the emerging economies of the African continent, but it is not the entire picture. Investors with a high-risk tolerance and an extended time horizon may consider doing more research in this region.

Final Thoughts
2010 turned out to be a good year for the market. In this case, even holding the S&P500 resulted in double digit gains (even without considering dividiends). The point of this index fund exercise is a reminder to investors to constantly focus on maintaining a diversified portfolio of investments. In addition, investors should also adopt an investment process for rebalancing their holdings by selling a percentage of winning investments and reinvesting those earnings in whatever you deem important or back into the other investments in your portfolio lagging others. (Find out whether these funds can really deliver low-risk returns, read Enhanced Index Funds - Shiny Paper Or Sparkling Gift?)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Mutual Funds & ETFs

    Top Three Transportation ETFs

    These three transportation funds attract the majority of sector volume.
  2. Stock Analysis

    5 Cheap Dividend Stocks for a Bear Market

    Here are five stocks that pay safe dividends and should be at least somewhat resilient to a bear market.
  3. Investing Basics

    Tops Tips for Trading ETFs

    A look at two different trading strategies for ETFs - one for investors and the other for active traders.
  4. Investing

    How to Win More by Losing Less in Today’s Markets

    The further you fall, the harder it is to climb back up. It’s a universal truth that is painfully apparent in the investing world.
  5. Fundamental Analysis

    Use Options Data To Predict Stock Market Direction

    Options market trading data can provide important insights about the direction of stocks and the overall market. Here’s how to track it.
  6. Stock Analysis

    2 Oil Stocks to Buy Right Now (PSX,TSO)

    Can these two oil stocks buck the trend?
  7. Investing News

    What Alcoa’s (AA) Breakup Means for Investors

    Alcoa plans to split into two companies. Is this a bullish catalyst for investors?
  8. Mutual Funds & ETFs

    Top 4 Investment Grade Corporate Bonds ETFs

    Discover detailed analysis and information about some of the top exchange-traded funds (ETFs) that offer exposure to the investment-grade corporate bond market.
  9. Stock Analysis

    Top 3 Stocks for the Coming Holiday Season

    If you want to buck the bear market trend by going long on consumer stocks, these three might be your best bets.
  10. Investing News

    Could a Rate Hike Send Stocks Higher?

    A rate hike would certainly alter the investment scene, but would it be for the better or worse?
  1. Can mutual funds invest in IPOs?

    Mutual funds can invest in initial public offerings (IPOS). However, most mutual funds have bylaws that prevent them from ... Read Full Answer >>
  2. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  3. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  4. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  5. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  6. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!