Hot Issues
spacer
The main benefits of professional financial help.
spacer
Downsizer contributions offer more than meets the eye
spacer
6 new financial videos
spacer
GDP by country since 1800
spacer
All Australia's vital statistics - October 2019
spacer
Does your mind help or hinder your investment success?
spacer
Four key principles that help achieve portfolio success
spacer
Traversing a synchronised economic slowdown
spacer
A positive pension change with a cash rate twist
spacer
Shares to remain volatile as trade war heats up
spacer
NALI, LRBA measures pass Parliament
spacer
Interest rising in SMSF set-up
spacer
Choosing your investment strategy
spacer
ATO letters indicate a wider SMSF warning
spacer
Australia by the numbers - September 2019
spacer
ATO opens applications for SG exemption
spacer
SMSFs attract younger members
spacer
Heed restrictions on downsizer contributions
spacer
Access to more resources and tools than most websites.
spacer
Valuations key to avoiding NALI restrictions
spacer
SMSF advice appetite strong, says ASIC
spacer
For a smoother path to investment success, diversify
spacer
How's Australia doing statistically?
spacer
LRBA changes mostly affect Melbourne, Sydney retirees
spacer
Lessons from the 2019 Index Chart
spacer
The global economy at midyear: How our views have changed
spacer
The biggest global corporations since 1998
Lessons from the 2019 Index Chart

Between smartphones, websites and watches that alert you even when you have ignored the phone, it is hard, if not impossible, to tune out the noise of the world.

       

 

Trade wars, Brexit, currency slumps, geopolitical tensions are just the headlines that can dominate the news cycle on any given day at the moment. Thankfully the Australian cricket team provided some welcome relief – and restored a little national pride – at Edgbaston.

Vanguard has been publishing its annual index chart that plots the performance of all the major markets and asset class indices for Australian investors for 18 years. It allows investors to look at how markets have rewarded them for the risk they have taken through periods of market rises and periodic slumps.

This year's chart provides the data to June 30 2019, and naturally there is always a tendency to focus on what has topped the performance table – US shares at 10.3 per cent per annum is the answer – and while interesting, that is not the key message from the chart.

The core message – and the reason for continuing to publish it over such an extended period of time – is to understand the power of markets over the long-term.

Think of a major event that roiled investment markets and look at that point on the chart – the last Australian recession in 1992 or the collapse of Lehman Bros, for example, in 2008 – to understand its impact at the time. Then zoom out to see how it affected returns over the full 30-year time period covered by the chart.

The other message provided by the index chart that is sometimes lost in translation is when investors lean towards wanting to predict what will be the top performing asset class next year… and the year after that.

You can view the digital version of the chart here (or order a print copy here) but if you are tempted to try and time markets, it's worth taking a look at page four of the index chart brochure which has a table of the total returns across all the major asset classes featured in the chart.

The best and worst performing asset classes are highlighted across each year – and feel free to let us know if you spot a performance pattern because what we see is what Burton Malkiel captured so elegantly in his investment classic, A Random Walk Down Wall Street.

The index chart shows the performance of markets over the long-term, but for individual investors its value is in understanding how you blend all of those markets to create a portfolio with the right asset allocation to achieve your investment goals within a risk level that you are comfortable with.

For investors a sense of perspective is a critical tool in the armory that can help tune out short-term noise, focus on your long-term goals and, as the legendary founder of Vanguard, Jack Bogle said, help you to "stay the course".

 


Written by Robin Bowerman
Head of Corporate Affairs at Vanguard.
6 August 2019
Vanguardinvestments.com.au

Pattinson Financial Services Pty Ltd ABN 17 121 851 376 is a Corporate Authorised Representative of Infocus Securities Australia Pty Ltd
ABN 47 097 797 049 AFSL and Australian Credit Licence No. 236523

Tel: +61 2 8850 6888 | Fax: +61 2 8850 6407 | Toll Free 1300 466 637 | PO Box 6253 Baulkham Hills BC NSW 2153

site By PlannerWeb