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Vanguard's 2020 Index Chart a timely reminder for investors to stay the course

Vanguard | 12 August 2020


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While recent volatility has rattled markets around the globe, Vanguard's 19th annual index chart provides a long term perspective to investors and demonstrates that while markets fluctuate, discipline pays off when it comes to investing.

The newly released chart tracks 30 years of performance across major asset classes to demonstrate the power of compounding returns over a long-term period.

For the first time, the chart is bookended by two recessions (the recession of 1990 – 93 and, most recently, the recession brought on by the global COVID-19 pandemic), and puts losses amid the Tech Wreck from 2000 and the Global Financial Crisis from 2008 into perspective, using 30 years of index data to show that looking beyond the short term is an important perspective in times of crisis.

According to the chart, since 1990 an initial $10,000 investment in the broad Australian share market would have yielded 8.9 per cent and grown to $130,457, while an investment in US shares would have returned 10.3 per cent, to reach $186,799.

$10,000 invested in 1990* Accumulated investment value
at 30 June 2020
% returns per annum
Australian shares $130,457 8.9%
International shares $82,969 7.3%
US shares $186,799 10.3%
Australian bonds $93,545 7.7%
Listed property $95,395 7.8%
Cash $44,172 5.1%

*Growth of $10,000 with no acquisition costs or taxes and all income reinvested.

Reflecting on the chart, Robin Bowerman, Vanguard's Head of Corporate Affairs commented "While COVID-19 and its impacts could not have been predicted, bear markets are to be expected. However times like these can be unnerving for even the most disciplined of investors.

"What this chart aims to show is that taking a long-term perspective and investing in a range of broad market asset classes gives investors the best chance of investing success.

"There's a wealth of research to show that time in the markets benefits most investors more than market timing, largely because market timing is incredibly challenging. The best and worst days often happen close to one another and in many cases, timing the market for re-entry simply results in selling low and buying high.

"It can be hard to tune out daily market noise – particularly when it is being driven by a global pandemic – and procrastination is a natural result for those at the start of their investing journey.

"The antidote to procrastination is a disciplined plan to invest small, affordable amounts over the long term and let compounding and market returns go to work," Mr Bowerman said.

How Bull and Bear markets have impacted returns, comparing three contributions strategies.

Each year, Vanguard's annually updated index performance chart is downloaded and used by thousands of financial advisers and individual investors. This year a series of digital tools and assets have been created to support advisers and investors in a COVID-19 environment.

To view the Vanguard 2020 Index Chart online and access the Index Chart toolbox, visit www.vanguard.com.au/indexchart.

 

About Vanguard

With more than AUD $8.8 trillion in assets under management as of 30 June 2020, including more than AUD $1.8 trillion in ETFs, Vanguard is one of the world's largest global investment management companies. In Australia, Vanguard has been serving financial advisers, retail clients and institutional investors for more than 20 years.


For further information please contact:

Francesca Marinucci
Senior Public Relations Specialist
Vanguard Australia
francesca.marinucci@vanguard.com.au
+61 413 559 766