Lessons from three decades of investing highlight the best strategies to turn around investment performance.
For the first time in 30 years, all assets in a diversified portfolio posted annual losses to June 30 as global markets were battered by rising interest rates and economic downturn, according to analysis by global fund manager Vanguard.
A $10,000 investment in US shares in 1993 would now be worth more than $182,000, more than five times the same investment in cash would have made and representing an annual compounded return of more than 10 per cent.The same amount invested in Australian equities would now be worth $131,000, representing an annual compounded return of more than 9 per cent. Australian shares offered the second-best returns over 30 years.
Marc Jocum, senior manager for online investment adviser Stockspot, says: “Active managers have not performed any better than the market index during this or previous periods of market volatility. However, active funds’ management fees stay the same even if they perform poorly, which is why we avoid them in all market environments.”
Stockspot’s Jocum adds: “Now is not the time to make drastic changes to your portfolio. Remaining diversified, sticking to your long-term strategy and periodically rebalancing your portfolio to its target weight is the best recipe to handle uncertain times.”Jocum says a year of negative performance is “very normal and not a reason to change your portfolio”.
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