The Vanguard 2013 Index Chart tracked the 30-year investment horizons of Australian, global and US equities; Australian bonds; listed property; cash and CPI up to 2013 and highlighted the key economic, social, political and demographic changes throughout the period.
The chart “illustrates the growth of markets over the long term, despite short-term fluctuations that may seem alarming when you are living through them,” said Robin Bowerman, Vanguard head of market strategy and communications.
According to the $10,000 invested in 1983, it would have returned $268,733 if the investor had bought Aussie equities, $190,702 if they had purchased US shares, $183,877 if they had invested in Australian bonds, and $168,900 for listed property.
The worst performing asset classes were international equities, returning $129,688 for the period, followed by cash at $105,786.
“In the quest for better returns, there is always the temptation to try and time markets in response to constant economic, social and political change. What this chart clearly demonstrates is that those who stay the course over the long term are rewarded for their patience and discipline,” Mr Bowerman stated.
Vanguard said this does not mean you should have all your investments in one asset class as it is important to have a diversified mix to smooth out returns over time.
“There is a deep body of academic research that highlights that the single most important decision any investor makes is the asset allocation decision. And it is in capturing market returns and balancing your portfolio’s asset allocation that index funds are effective and low cost,” Mr Bowerman said.
This is the 13th year Vanguard has produced the index chart, with each edition tracking the 30-year performance of major asset class indices.
