As important economic news is continually hitting the headlines, its important to think about how these developments are affecting 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 if your portfolio has the right balance of risk and return.

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Focus ETF Year to Date
U.S. Dollar PowerShares DB US Dollar Index Bullish
(ARCA:UUP)
-0.18%
U.S. Equity SPDRS S&P 500 Index
(ARCA:SPY)
+8.13%
Technology PowerShares QQQ
(Nasdaq:QQQ)
+15.06%
Europe, Australia-Asia iShares MSCI EAFE Index
(ARCA:EFA)
+1.31%
Energy United States Oil
(ARCA:USO)
-16.87%
Precious Metals iShares Comex Gold Trust
(ARCA:IAU)
+3.61%
Fixed Income iShares Barclays 7-10 Year Treasury (ARCA:IEF) +2.34%



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 was on a steady uptrend until April before it started to decline in recent months. From the beginning of the year to now, the S&P 500 (as well as the DJIA) has at times seen gains over 10%.

SEE: Index Investing

Pullbacks and Producers
Gold futures prices, followed by the iShares Comex Gold Trust fund, have continued to trade near record highs. The U.S. dollar index, followed by the PowerShares DB US Dollar Index Bullish fund, is down slightly. Investors have sought out gold over US dollars as protectors against the uncertainty in the markets.

Technology is near flat since March as top PowerShares QQQ fund holdings like Apple (Nasdaq:AAPL), Qualcomm (Nasdaq:QCOM) and Google (Nasdaq:GOOG) are all near flat in the same time frame as well.

Final Thoughts
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.

SEE: 6 Asset Allocation Strategies That Work

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