A Rising Market Does Not Lift All Investors Boats A year-end snapshot of investor performance in 2014: How did the 1% do compared with the 99%? Which states had highest investment returns? How do investors feel about 2015? And much more All data in this report is aggregated and anonymized from investors who sync and track their portfolios with SigFig. Learn more at www.sigfig.com or email insights@sigfig.com. A
First, let s get the bad news out of the way: For everyday investors, the year hasn t been so great. 12-month Returns 13% 11% 4.5% 30% 70% S&P 500 60/40 BALANCED PORTFOLIO MEDIAN INVESTOR As of mid-december, the median investor has a 4.5% portfolio return (12-month trailing). 30% of investors are on track to end the year with negative or zero returns. Notes: median SigFig investor is 41 years old. Returns include dividends. Time period for this analysis is the 12 months ending 12/12/2014. This analysis is based on aggregated anonymized data representing >320K investors tracking their portfolio on SigFig. 1
But in some states, investors did better than in others Washington state is the highest performing state in terms of median investment return, followed by Massachusetts, and Minnesota. Mississippi, Oklahoma and Arkansas make up the bottom three. Map represents the median 12-month performance ending 12/12/2014 of investors who live in each state. Only states with at least 300 investors on SigFig are represented. 2
The wealthiest 1%* did better than everyone else 12-month Returns 4.3% 5.8% 1.3X BETTER And so did people from the top 20 universities compared to other universities: THE NINETY-NINE PERCENT 2.9% OTHER UNIVERSITIES THE ONE PERCENT 4.7% TOP UNIVERSITIES 1.6X BETTER Investors from Top 20 schools** have 1.6 times 12-month returns compared to everybody else. * The wealthiest 1% on SigFig have synced assets $5 million or more. Returns include dividends. Time period for this analysis is the 12 months ending 12/12/2014. The average portfolio value for the 1% is $13 million; the median is $8 million. For the 99%, average portfolio value is $300,000; median is $56,000. ** Investors are identified using *.edu email addresses, and may include current students, alumni, faculty, or employees. For the purposes of this analysis, Top 20 schools are those with email accounts associated with the top 20 universities from 2014 US News National University Rankings. There are about 4,000 investors in the sample, of which 600 are from the top 20 schools. 3
The 1% invest in different securities than the rest of us, too: THEY ARE LESS LIKELY TO OWN THEY ARE JUST AS LIKELY TO OWN THEY ARE MUCH MORE LIKELY TO OWN FORD (F) 0.5 TIMES ALIBABA GROUP (BABA) 0.5 TIMES FACEBOOK (FB) 0.6 TIMES APPLE (AAPL) 0.6 TIMES SPDR GOLD SHARES (GLD) COSTCO (COST) CISCO SYSTEMS (CSCO) BERKSHIRE HATHAWAY CLASS A (BRK/A) - 14 TIMES WILLIAMS COMPANIES (WMB) 3.5 TIMES NESTLE (NSRGY) 3 TIMES ACTAVIS (TACT) 3 TIMES This analysis is based on aggregated anonymized data representing >320K investors tracking their portfolio on SigFig. 4
And while frequent trading is hazardous to your wealth: Median 12 Month Return 0.13% 4.7% FREQUENT TRADERS INFREQUENT TRADERS The 1% are more disciplined traders than the 99%: Annual Portfolio Turnover 13% 11% THE NINETY-NINE PERCENT THE ONE PERCENT They have 15% lower portfolio turnover than everyone else. Frequent traders: Investors who have a turnover amount of equal to or greater than their portfolio value in a year. These represent about 17% of investors in the data set for this analysis. Portfolio turnover measures how much an investor s portfolio changes over the course of a year. Selling all investments in a portfolio and buying new ones is 100% turnover. 5
In fact, average returns are notably higher at brokerages where investors have lower portfolio turnover: VANGUARD AMERITRADE TRADEKING RETURNS (AVG = 100) 123 93 45 PORTFOLIO TURNOVER (AVG = 100) 81 150 256 This analysis is based on aggregated anonymized data representing more than 320,000 investors who have synced their portfolio with SigFig. Returns are indexed to median investor return of 4.5%, while portfolio turnover is indexed to median investor annual portfolio turnover of 13%. 6
And these red flags for poor investing behavior apply to everyone: RISK 61% of investors own no bonds (up from 50% in 2013) 40% own only single stocks (up from 33% in 2013) NEGLECT 28% have more than 10% in idle cash (down from 33% in 2013) All data in this analysis is aggregated and anonymized from investors who sync and track their portfolios with SigFig. 7
Now let s take a look at home-state investment bias ARNA Arena Pharmaceuticals AZN AstraZeneca BAC Bank of America BRK/B Berkshire Hathaway CERN Cerner CLNE Clean Energy Fuels CMI Cummins COP ConocoPhillips CTL CenturyLink CVX Chevron D Dominion Resources DATA Tableau Software DE Deere DNKN Dunkin Brands Group DUK Duke Energy FE FirstEnergy FITB Fifth Third Bancorp GE General Electric GOGO Gogo GOOG Google GOOGL Google HBAN Huntington Bancshares HK Halcon Resources INVN InvenSense KMI Kinder Morgan LVS Las Vegas Sands MAIN Main Street Capital NEE First Trust New Opprtnts MLP & Engy Fd NU Northeast Utilities System PPL PPL Electric Utilities RF Regions Financial SD SandRidge Energy SLB Schlumberger SO Southern Co SODA Sodastream International Ltd SU Suncor Energy T AT&T UNH UnitedHealth Group WEC Wisconsin Energy WFM Whole Foods Market YELP Yelp This map shows, by state, the stock that investors in each state are most likely to own relative to the rest of the country. See following page for details. All data in this analysis is aggregated and anonymized from >320,000 investors who sync and track their portfolios with SigFig. 8
Investors tend to own stocks close to home Nebraskans are 3.1 times more likely to own Berkshire Hathaway (BRK/B). Nevada investors are 3.9 times more likely to own Las Vegas Sands (LVS). Massachusetts residents are 3.5 times more likely to own Dunkin Donuts (DNKN). California investors are 2 times more likely to own Yelp (YELP), headquartered in San Francisco. Washington state residents are 4.8 times more likely than the rest of the country to own Tableau (DATA), headquartered in Seattle. Minnesota investors are 3.5 times more likely to own UnitedHealth Group (UNH), headquartered near Minneapolis, MN. 9
And here s how investor sentiment for the most popular stocks changed in the past 12 months: OPTIMISM INDEX 2013 OPTIMISM INDEX 2014 CHANGE APPLE (AAPL) 61% 67% +6% FACEBOOK (FB) 52% 55% +3% MICROSOFT (MSFT) 56% 62% +6% GENERAL ELECTRIC (GE) 66% 68% +2% FORD (F) 61% 62% +1% BANK OF AMERICA (BAC) 57% 60% +3% INTEL (INTC) 63% 58% -5% TESLA (TSLA) 58% 56% -2% CISCO (CSCO) 58% 58% Optimism Index = % of users trading who added to their positions. Equities are traded by at least 1,000 investors on SigFig between Jan 2, 2013 and Dec 4, 2014. 10
Who knew? In 2014, investor optimism in Sprint and Hewlett Packard increased more than optimism in Apple! SPRINT (S) HP (HPQ) APPLE (AAPL) Investors have also been eager to invest in the fracking and US oil/gas industries: 2013 2014 CHANGE 40% 52% 61% 50% 59% 67% +10% +7% +6% SCHLUMBERGER (SLB) HALLIBURTON (HAL) TRANSOCEAN (RIG) MARATHON OIL (MRO) 2013 2014 CHANGE 51% 52% 55% 50% 62% 62% 64% 57% +11% +10% +9% +7% And grew bearish on some high-profile companies, like Sony: SIRIUS (SIRI) NUANCE COMM. (NUAN) SONY (SNE) 2013 2014 CHANGE 54% 59% 61% 49% 45% 48% -14% -14% -13% Optimism index = % of users trading who added to their positions. Equities are traded by at least 1,000 investors on SigFig between Jan 2, 2013 and Dec 4, 2014. 11
Meanwhile, the Apple stock split got investors more excited than any other Apple event in 2014: Optimism Index The AAPL stock split caused an all-time high in the ratio of buyers to sellers even bigger than the iphone 6 announcement in September. Optimism Index = % of users trading who added to their positions. 12
Investors were way more into Alibaba s IPO than Twitter s: Alibaba s IPO was greeted with greater and more sustained enthusiasm than Twitter s IPO in 2013. BABA stock saw significantly more buying than selling during IPO week. Five weeks post IPO, while Twitter had an equal number of users buying and selling, Alibaba had 2 times more buyers than sellers. 13
Optimistic... or overconfident? 2014 Performance DID BETTER OR AS WELL AS THE MARKET 16% 2015 Sentiment Survey EXPECT TO DO WORSE THAN THE MARKET 9% 84% DID WORSE THAN THE MARKET 91% EXPECT TO DO BETTER OR AS WELL AS THE MARKET 84% of investors did worse than the market in 2014, yet 91% expect to do as well or better than the market in 2015. 2014 performance data based on an analysis of more than 320,000 investors who track their portfolios with SigFig. Data as of 12/12/2014. 2015 Sentiment Survey data conducted with 400 randomly sampled investors nationwide. 14
About SigFig SigFig is the largest portfolio optimization platform in the world helping everyday investors track over $350B in assets. Through partnerships with Fidelity, Schwab, and Ameritrade, we analyze, monitor and improve your portfolio, or help build a new one. Using advanced algorithmic strategies, SigFig automatically balances and diversifies your investments, while reducing risk and minimizing fees. About this Report The analysis in this report is based on data aggregated and anonymized from investors who have synced their investment accounts on SigFig. Results shown are statistically significant, i.e. differences between groups are unlikely to be random, at the 95% level. Technical details are available upon request. Contact Information For more information, email insights@sigfig.com or call (415) 558-9611 Disclaimers Past returns reflect performance of assets over the course of one calendar year from 12/13/2013 to 12/12/2014 unless otherwise noted. Data is based on aggregated anonymized data representing SigFig users unless otherwise noted. Results are net of all management fees and expenses unless otherwise noted. Performance data includes reinvestment of dividends and interest unless otherwise noted. 15