In this episode of “What’s the Risk?” we take a look at the historic performance of a combination of the MSCI World ex Australia Index (net div., AUD) and the S&P/ASX 300, split 60/40 and rebalanced on an annual basis. Some people would know the ETFs that seek to track the performance of these indices as the VAS/VGS split, which is a popular portfolio for Australian DIY investors.
We go back to the inception of the combination of this portfolio in 1980, to look at the ups and downs along the way, including long and short term periodic performance, growth of wealth, range of returns and average returns, rolling annual returns, largest fall and time to recovery, and the risk return relationship (efficient frontier) compared to some other asset classes.
We specifically take a look at the patience that would have been required by investors across the 2000’s. This was due the significant under performance of the MSCI World across the 2000’s due to the dotcom bubble, terrorism, Iraq war and a the global financial crisis. We also highlight the effect rebalancing this portfolio had on improving returns, due to the variance in performance of the two indices.
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