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Morningstar asset class performance, 2021 and historical

The start of a new year is a good time to review portfolio performance and consider long-term settings for a financial future.

This article breaks Morningstar reporting into five tables to show market performance over all time periods to 30 years, as well as measures of risk and drawdowns. The chart on long-term performance shows Australian equities and listed property doing best since 1989. 

Table 1: Asset class performance from 1 month to 30 years

Table 2: Standard deviation (a measure of risk) by asset class

Table 3: Historical 1-year returns

Table 4: Historical 5-year returns

Table 5: Historical drawdown (market falls)

Tables sourced from Morningstar Adviser Research Centre.

Chart

Source: Morningstar Adviser Research Centre.

 

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5 Comments
D Ramsay
January 15, 2022

Could we please also get the modal values (i.e. mode = the most common score) into the Historical 1 and 5 -year returns into those tables please as it would give a perspective of how Normalized or Skewed the distribution is.

John
January 13, 2022

The chart included (showing relative performance of asset classes) is in a format that I have long considered poor because it is easily manipulated by merely changing the start date. My other criticism is that there is virtually no investor that has that exact experience.

Instead, I suggest an alternative.

Instead of starting with a dollar investment, some time in the past, instead produce a graph that has today as its end date, with each of the asset classes ending up with $100 invested, and the line of the graph says for each date on the horizontal axis, how much money would need to be invested to end up with the $100.

The highest performing asset class would in this graph be the one with the lowest amount of initial investment. The big advantage of this graph would be that any investor could select a start date, and see how much they needed to invest at that start date, in that asset class to end up with $100 now. You could see what proportion of investment dates (finishing today) would produce negative returns, and what proportion positive (or you could make a good guess along those lines)

Dudley
January 13, 2022

"with each of the asset classes ending up with $100 invested":

Better; then only need to time travel to make guaranteed outcome investments.

Tomorrow's race results are best.

Alexander Stitt
January 15, 2022

Wholeheartedly agree with John, that showing a common end point allows a much better understanding of where past performance differentials have arisen and overcomes the problem in the choice of start date; and I've long though this. A quick look at how different the results would be on the existing chart if the start date was 2006 vs 2009 easily illustrates the point. Maybe such a chart requires a bit more work from the user to comprehend, but is, in effect, just the tables of "past 1 years performance", "past 3 years performance", "past 10 years performance" put into a common chart with all time intervals on display all the way back to the chart start, not just the arbitrary "1 year", "3 year" "10 year" etc. observations.

I suspect Dudley, in his comment, did not fully understand what John was proposing.

Dudley
January 15, 2022

Been presenting semi-log cumulative total value normalised to 1 at current date for years.
More clearly shows relative growth rates.
Does not predict future.

 

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