Index-based approaches have empowered investors to capitalize on the market rebound. This is the key takeaway from our performance analysis conducted at the end of August 2023, which once again positions Easyvest's recommended index strategy at the top of the rankings.
2023 allowed investors to gradually absorb their losses from the previous year, thanks to a remarkable stock market rebound. The investor who favored ETFs as offered by Easyvest and who opted for an aggressive profile mainly exposed to global stocks would have benefited from excellent returns in 2023 compared to the active management of traditional financial institutions. The more time passes, the more index investing seems to stand out. Over the last 5 years, this strategy has offered a return of 7,3% per year for a aggressive profile, which totals a cumulative return of 55%. After 10 years, the total return on this profile even reaches 115%!
Bonds also rebounded magnificently in 2023. The index approach, even for cautious investment profiles, has therefore offered very good returns: +9,7% over this year alone. Over three years, returns are still negative for these investors regardless of the fund selected, but the index approach could quickly allow them to return to the green, based on past observations. For moderate investment profiles, the excellent performance of global equities allowed followers of the index approach to stand out from Belgian active managers with returns of +12,8% over one year and +2,2% over three years.
These results underscore that the index-based approach seems the most rational choice, regardless of market conditions. In this analysis, the additional cost incurred by investors for active management, aimed at better protection during downturns, appeared unjustified, but it also weighted down performance during market upswings. Over the long term, the performance differentials between index-based and active management have been substantial. For an aggressive profile, the cumulative gap over 10 years is 45% compared to the average performance of the funds studied, and 70% compared to the least performing one.
This statement takes on its full meaning in view of the figures that we have presented every 6 months for more than 3 years: over investment horizons of 5 and 10 years, whatever the investment profile selected, the index approach offers consistently the best returns. The rare exceptions observed over time horizons of 1 or 3 years clearly do not carry enough weight to influence the trend, which should convince long-term investors to opt for index investing. To find out for yourself, do not hesitate to consult our old annual performance blogs (2022 and 2021).
Every situation is unique and merits a personalized analysis. If you have a portfolio managed by a Belgian financial institution and are not entirely satisfied with your performance, simply send us a recent management report, and we will provide a comprehensive audit within 24 hours. Presented in the form of an infographic, this report compares the performance of your current portfolio with a comparable index-based portfolio in terms of risk. One of our portfolio managers will then contact you to discuss the analysis and transparently address your objectives.
For more details on the index approach and the performance of the examined investment funds, please refer to the infographic below. The methodology and data sources used are also outlined in detail. Note that a large bank present in Belgium does not appear in the analysis of the aggressive approach over 10 years: this is not an error on our part. This bank having changed its range of funds, we do not have a sufficiently long performance history in this category.