2007 had been a relatively good year for my overall portfolio. The portfolio returned around 11%. Of the 11% total return, about 8% is contributed by the equity portion, with the remainder 3% being generated by the fixed income portion. Two asset classes had negative returns — US SmallCap and US REIT. After years of outperformance, US REIT finally had a slump year, dropping almost 16.5% in 2007.
The best returns came from Emerging Market and Precious metal and mining equity, returning 39% and 36%, respectively. They both contributed an aggregate of 5.7% to the portfolio’s return. Healthcare stocks also outperformed US markets in general, returning an average of around 14%.
Because of the fall of the US dollar, fixed income assets which had non-USD allocations also peformed well, gaining around 10% for the year.
Overall, I am quite happy with my portfolio’s performance. Going forward, against the backdrop of economic uncertainty and subprime issues, I believe 2008 will be a relatively poor year for the equity portion — and I would probably see negative returns in more of the equity asset classes. However, there is no need for panic; and I have no intention to deviate from my existing 70%-equity / 30%-fixed income portfolio. Stay the course!
I conclude with a chart showing the breakdown of my portfolio over the past few years (click to enlarge):
Related post : Portfolio summary for 2006.