MLC - popular charts
December 2013
Important information
This information has been provided by MLC Investments (ABN 30 002 641 661) and MLC Limited (ABN 90 000 000 402),
members of the National Australia Bank group of companies, 105–153 Miller Street, North Sydney 2060.
This communication contains general information and may constitute general advice. Any advice in this communication has
been prepared without taking account of individual objectives, financial situation or needs. It should not be relied upon as a
substitute for financial or other specialist advice. Before making any decisions on the basis of this communication, you
should consider the appropriateness of its content having regard to your particular investment objectives, financial
situation or individual needs. You should obtain a Product Disclosure Statement or other disclosure document relating to
any financial product issued by MLC Investments Limited (ABN 30 002 641 661) and MLC Nominees Pty Ltd (ABN 93 002 814
959) as trustee of The Universal Super Scheme (ABN 44 928 361 101), and consider it before making any decision about
whether to acquire or continue to hold the product. A copy of the Product Disclosure Statement or other disclosure
document is available upon request by phoning the MLC call centre on 132 652 or on our website at mlc.com.au.
An investment in any product offered by a member company of the National Australia Bank group of companies does not
represent a deposit with or a liability of the National Australia Bank Limited ABN 12 004 044 937 or other member company
of the National Australia Bank group and is subject to investment risk including possible delays in repayment and loss of
income and capital invested. None of the National Australia Bank Limited, MLC Limited, MLC Investments Limited or other
member company in the National Australia Bank group guarantees the capital value, payment of income or performance of
any financial product referred to in this publication.
Past performance is not indicative of future performance. The value of an investment may rise or fall with the changes in the
market. Please note that all performance reported is before management fees and taxes, unless otherwise stated.
2
Chart index
Chart title
Slide
Data source
Cash and term deposit
rates aren’t always high
5
Term deposit rates over the past 10 years - MLC Investment Management, Reserve Bank of Australia. Data as
at 31 December 2013. Based on banks’ 1 year term deposit rates ($10,000)
Shares vs term deposits
6
Income and capital return on an investment of $100,000 in December 1980 – December 2011 - Based on
calculations by MLC Investment Management as at 31 December and based on market index data. Shares –
represented by the ASX All Ordinaries Accumulation and Price Indices. Income calculated as the difference
between the return of the accumulation and price indices, multiplied by capital value. Term Deposit –
represented by the Reserve Bank of Australia (RBA) 12 month Banks’ Term Deposits ($10,000), prior to January
1982, the RBA 12 month Term Deposit rate ($5000 - $10,000). All data assumes income is not re-invested.
Growth of an investment
in the Australian
sharemarket over 20
years
7
Value of $100,000 invested over 20 years (income reinvested) - MLC Investment Management, data as at 31
December 2013. Tick. Australian Shares: ASX All Ordinaries Accumulation Index
Own or loan?
8
Investment of $100,000 in December 1989 - December 2013. Based on data from Reuters, ASX and Reserve
Bank of Australia.
Consistency of dividend
returns
9
Income on an investment of $100,000 in December 1980 – December 2013 . Shares – represented by the ASX
All Ordinaries Accumulation and Price Indices. Income calculated as the difference between the return of the
accumulation and price indices, multiplied by capital value. Term Deposit – represented by the Reserve Bank of
Australia (RBA) 12 month Banks’ Term Deposits ($10,000), prior to January 1982, the RBA 12 month Term
Deposit rate ($5000 - $10,000). All data assumes income is not re-invested.
Shares have
outperformed cash
10
Value of $100,000 invested over 20 years (income reinvested) - Factset, based on market index data updated to
31 December 2013. Australian shares: ASX All Ordinaries Accumulation Index. Cash: UBS Bank Bill Index
The impact of inflation
11
The value of $1,000 invested for 10 years (taking into account inflation) - Data calculated over 10 year periods by
MLC Investment Management using data provided by Global Financial Data, Inc. and Thomson Reuters
Datastream.
3
Chart index (continued)
Chart title
Slide
Data source
Days out of the market
will erode your wealth
12
Value of $10,000 invested over 20 years - Calculations by MLC Investment Management using data
as at 31 December 2013. The ‘market’ is the Australian share market and is represented by the ASX
All Ordinaries Accumulation Index.
Growing your wealth
through a regular
investment strategy
13
Dollar cost averaging calculations by MLC Investment Management
Staying invested
would have kept you
ahead (‘the chaser’)
14
The value of $100,000 invested in 1980 - Calculations by MLC Investment Management. Data as at
31 December 2013, based on market index data. All Ordinaries Accumulation Index, MSCI World
Gross Accumulation Index ($A), UBS Warburg Composite Bond Index (ASAM) (Commonwealth Bank
Bond Accumulation Index prior to September 1989), S&P/ASX200 Property Accumulation Index
(Listed Property Trust Accumulation Index prior to July 2000), UBS Warburg Bank Bill Index (RBA 13
Week Treasury Notes prior to April 1987). Chaser assumes 100% investment in the highest
performing asset class from the previous year. Balanced investor asset allocation: Australian
shares:37%, Global shares: 24%, Australian Bonds: 31%, Listed property securities: 8%, Cash 0%.
Income and dividends reinvested.
Impact of world events
on the Australian
sharemarket
15
The value of $100,000 invested 25 years ago - MLC Investment Management, data as at
31 December 2013. Tick marks indicate 1 January. ASX All Ordinaries Accumulation Index.
Following the latest
trend – tech boom
16
NASDAQ Composite Index - Value of $10,000 invested in December 1984 (dividend income not
included) - Calculations by MLC Investment Management as at 31 December 2013.
Comparison of returns
from global shares
and term deposits
since 2002
17
MLC Investment Management. Data as at 31 December 2013. MSCI World Index (hedged - $A).
Term deposits: 1 year bank’s term deposit ($10,000) – Reserve Bank of Australia
4
Cash and term deposit rates
aren’t always high
They rise just as often as they fall
One year term deposit rates
1 yr
10
9
Current RBA interest rate is
2.5% and a 1 year term deposit
rate with the National Australia
Bank is 3.4%
8.3% July 2008
8
6
December 2013
5
4
3
2
3% March 2009
1
Oct-2013
Jun-2013
Feb-2013
Oct-2012
Jun-2012
Feb-2012
Oct-2011
Jun-2011
Feb-2011
Oct-2010
Jun-2010
Feb-2010
Oct-2009
Jun-2009
Feb-2009
Oct-2008
Jun-2008
Feb-2008
Oct-2007
Jun-2007
Feb-2007
Oct-2006
Jun-2006
Feb-2006
Oct-2005
Jun-2005
Feb-2005
Oct-2004
Jun-2004
Feb-2004
Oct-2003
Jun-2003
Feb-2003
Oct-2002
Jun-2002
0
Feb-2002
Returns %
7
With low term deposit rates you may not get the level of growth and income
you need to achieve your goals.
MLC Investment Management, Reserve Bank of Australia. Data as at 31 December 2013.
Based on banks’ 1 year term deposit rates ($10,000) as at 24 March 2014.
5
Shares vs term deposits
Income and capital return on an investment of $100,000 in December 1980 – December 2013
Income
Income from
shares grows
over time
$50,000
Capital Value
$1,400,000
$45,000
$1,200,000
$40,000
$1,000,000
$35,000
$30,000
$800,000
$25,000
$600,000
$20,000
$15,000
$400,000
$10,000
$200,000
$5,000
$0
$0
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Year ended 31 December
Annual Income from Term Deposits
Annual Income from Shares (ASX All Ords)
Capital Value of Term Deposits
Capital Value of Shares (ASX All Ords)
Capital value of
term deposit
does not grow
Based on calculations by MLC Investment Management as at 31 December and based on market index data. Shares – represented by the ASX All Ordinaries Accumulation and Price
Indices. Income calculated as the difference between the return of the accumulation and price indices, multiplied by capital value. Term Deposit – represented by the Reserve Bank of 6
Australia (RBA) 12 month Banks’ Term Deposits ($10,000), prior to January 1982, the RBA 12 month Term Deposit rate ($5000 - $10,000). All data assumes income is not re-invested.
Growth of an investment in the
Australian sharemarket over 20 years
Despite recent sharemaket volatility, the long-term trend
for shares has been up
Value of $100,000 invested over 20 years (income reinvested)
$600,000
$551,045
Australian
Shares
$500,000
$400,000
$300,000
$200,000
$100,000
$1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
7
MLC Investment Management, data as at 31 December 2013. Tick marks indicate 1 January. Australian Shares: ASX All Ordinaries Accumulation Index.
Own or loan?
Income and growth of a term deposit with
NAB vs owning NAB shares
Investment of $10,000 in December 1989 – December 2013
$3,500
$80,000
NAB - Dividends
$2,500
Term Deposits - Interest
NAB - Capital value
Term Deposits - Capital Value
$70,000
$60,000
$50,000
$2,000
$40,000
$1,500
$30,000
Capital value
Interest and dividends
$3,000
$1,000
$20,000
$500
$0
$10,000
$0
8
Calculations by MLC Investment Management as at 31 December. Based on data from Reuters, ASX and Reserve Bank of Australia . All data assumes
income is not re-invested.
Consistency of dividend returns
Income from term deposits was higher initially, but income
from shares grew significantly
Income on an investment of $100,00 in December 1980 – December 2013
Income
$50,000
$45,000
$40,000
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$0
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Year ended 31 December
Annual Income from Term Deposits
Annual Income from Shares (ASX All Ords)
Source: Shares – represented by the ASX All Ordinaries Accumulation and Price Indices. Income calculated as the difference between the return of the accumulation
and price indices, multiplied by capital value. Term Deposit – represented by the Reserve Bank of Australia (RBA) 12 month Banks’ Term Deposits ($10,000), prior to 9
January 1982, the RBA 12 month Term Deposit rate ($5000 - $10,000). All data assumes income is not re-invested.
Shares have outperformed cash
Based $10,000
Over the past 20 years, an investment in shares provided
significantly more growth than an investment in cash
Value of $100,000 invested over 20 years (income reinvested)
Based on an investment of $10,000
$600,000
Australian Shares
Cash
$551,045
$500,000
$537,412
$400,000
$300,000
GFC
$290,282
$200,000
$100,000
$1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
10
Factset, based on market index data updated to 31 December 2013. Australian shares: ASX All Ordinaries Accumulation Index. Cash: UBS Bank Bill
Index
The impact of inflation
Value of investment (above inflation)
Cash vs Australian shares
Data calculated over 10 year periods by MLC Investment Management using data provided by Global Financial Data, Inc. and Thomson
Reuters Datastream.
11
Days out of the market will erode your wealth
Value of $10,000 invested over 20 years
$60,000.00
$50,000.00
$55,105
Remained
invested
Missed the
best 10 days
$40,000.00
$34,419
$30,000.00
$20,000.00
$10,000.00
$0.00
0 days out of the market
10 days out of the market
12
Calculations by MLC Investment Management using data as at 31 December 2013. The ‘market’ is the Australian share market and is represented
by the ASX All Ordinaries Accumulation Index.
Growing your wealth through a regular investment strategy
‘dollar cost averaging’
This strategy takes the guess work out of when to invest
Month
Monthly
investment
Unit price
Units
purchased
1
$200
$10.00
20
2
$200
$6.66
30
3
$200
$5.00
40
4
$200
$6.66
30
5
$200
$10.00
20
Total
$1,000
• Dollar cost averaging helps
you benefit from short-term
market volatility.
• By investing smaller
amounts at regular
intervals you’ll buy less
when the market is up (and
prices are high) and more
when the market is down
(prices are low). You may
end up with greater units
than if you invested in a
lump sum.
140
Total amount paid for investment = $1,000
Average price paid = $7.14 (ie $1,000/140 units)
Investment value at the end of 5 months = $1,400 (ie 140 units at $10 each)
13
Source: MLC Investment Management.
Staying invested would have kept you ahead
Over the long term, staying invested would have given you
better returns compared to ‘the chaser’ who is clouded by hype
and reacts to the latest news.
The value of $100,000 invested since December 1980
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
The chaser moves in
and out of the market
by investing in last
year’s best performing
asset class
Balanced investor –
Staying fully invested
$3,415,607
$1,529,074
$1,500,000
$1,000,000
$500,000
Strategic Balanced Portfolio
2009
2010
2011
2012
2013
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1980
1981
1982
1983
1984
1985
$-
The Chaser
Calculations by MLC Investment Management. Data as at 31 December 2013, based on market index data. All Ordinaries Accumulation Index, MSCI World Gross Accumulation Index ($A), UBS
Warburg Composite Bond Index (ASAM) (Commonwealth Bank Bond Accumulation Index prior to September 1989), S&P/ASX200 Property Accumulation Index (Listed Property Trust Accumulation
Index prior to July 2000), UBS Warburg Bank Bill Index (RBA 13 Week Treasury Notes prior to April 1987). Chaser assumes 100% investment in the highest performing asset class from the
14 previous
year. Balanced investor asset allocation: Australian shares:37%, Global shares: 24%, Australian Bonds: 31%, Listed property securities: 8%, Cash 0%. Income and dividends reinvested.
Impact of world events on the Australian
sharemarket
The value of $10,000 invested 25 years ago
MLC Investment Management, data as at 31 December 2013. Tick marks indicate 1 January. Australian Shares: ASX All Ordinaries
Accumulation Index.
15
Following the latest trend – tech boom
The impact of the tech boom and media hype
The value of $10,000 invested in December 1984 (dividend income not included)
$250,000
$200,000
$150,000
Investors went into a frenzied
buying spree. Invested heavily in
companies without fully
understanding the companies
they were investing in.
Companies began to
fold and investors
started to panic
$100,000
$50,000
1984
1985
1985
1986
1986
1987
1987
1988
1988
1989
1989
1990
1990
1991
1991
1992
1992
1993
1993
1994
1994
1995
1995
1996
1996
1997
1997
1998
1998
1999
1999
2000
2000
2001
2001
2002
2002
2003
2003
2004
2004
2005
2005
2006
2006
2007
2007
2008
2008
2009
2009
2010
2010
2011
2011
2012
2012
2013
2013
$0
Source: Calculations by MLC, based on data from Factset
16
Source: FactSet and MLC Investment Management. Technology stocks: NASDAQ Composite Index.
Comparison of returns from global shares and term deposits
since 2002
If you’d remained invested in global shares after Lehman
Brothers collapsed you’d have almost $236,909 compared to
$136,343 if you moved your money to a term deposit.
$250,000
$236,909
Global shares
Term deposit
$200,000
$150,000
Lehmans
collapse
$136,343
$100,000
$50,000
$0
MLC Investment Management. Data as at 31 December 2013. MSCI World Index (hedged - $A). Term deposits: 1 year bank’s term deposit
($10,000) – Reserve Bank of Australia
17