FOR ADVISERS ONLY
MLC POPULAR CHART PACK
Updated as at 30 June 2015
Important information
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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
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An investment in any product offered by a member company of the National Australia Bank group of companies does not
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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 – Jana Corporate Investment Services, Reserve Bank of Australia.
Data as at 30 June 2015. 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 Jana Corporate Investment Services 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) - Jana Corporate Investment Services, data as at
31 December 2014. Tick. Australian Shares: ASX All Ordinaries Accumulation Index
Own or loan?
8
Investment of $100,000 in December 1989 - December 2014. 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 2014 . 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 2014. 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
Jana Corporate Investment Services 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 JANA Corporate Investment Services using data as at
31 December 2014. 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 JANA Corporate Investment Services
Staying invested would
have kept you ahead
(‘the chaser’)
14
The value of $100,000 invested in 1980 - Calculations by JANA Corporate Investment Services. Data as at 31
December 2014, based on market index data. All Ordinaries Accumulation Index, MSCI World Gross
Accumulation Index ($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 in 1986 - JANA Corporate Investment Services, data as at 30 June 2015. 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 JANA Corporate Investment Services as at 30 June 2015.
Comparison of returns
from global shares and
term deposits since
2002
17
JANA Corporate Investment Services. Data as at 30 June 2015. 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
8.3% July 2008
8
7
Current RBA interest rate is
2.5% and a 1 year term deposit
rate with the National Australia
Bank is 3.2%
5
4
3
2
3% March 2009
1
0
Dec-1999
Mar-2000
Jun-2000
Sep-2000
Dec-2000
Mar-2001
Jun-2001
Sep-2001
Dec-2001
Mar-2002
Jun-2002
Sep-2002
Dec-2002
Mar-2003
Jun-2003
Sep-2003
Dec-2003
Mar-2004
Jun-2004
Sep-2004
Dec-2004
Mar-2005
Jun-2005
Sep-2005
Dec-2005
Mar-2006
Jun-2006
Sep-2006
Dec-2006
Mar-2007
Jun-2007
Sep-2007
Dec-2007
Mar-2008
Jun-2008
Sep-2008
Dec-2008
Mar-2009
Jun-2009
Sep-2009
Dec-2009
Mar-2010
Jun-2010
Sep-2010
Dec-2010
Mar-2011
Jun-2011
Sep-2011
Dec-2011
Mar-2012
Jun-2012
Sep-2012
Dec-2012
Mar-2013
Jun-2013
Sep-2013
Dec-2013
Mar-2014
Jun-2014
Sep-2014
Dec-2014
Mar-2015
Jun-2015
Return %
6
With low term deposit rates you may not get the level of growth and income
you need to achieve your goals.
Source: JANA Corporate Investment Services Limited, Reserve Bank of Australia. Data as at 30 June 2015. Based on banks’ 1 year term
deposit rates ($10,000).
5
Shares vs term deposits
Income and capital return on an investment of $100,000 in December 1980 – December 2014
Income
Capital Value
$50,000
Income from
shares grows
over time
$45,000
$1,400,000
$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 14
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
Source: Based on calculations by JANA Corporate Investment Services 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.
6
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
Despite recent sharemaket volatility, the long-term trend
for shares has been up
Value of $100,000 invested over 20 years (income reinvested)
$700,000
$607,774
$600,000
Australian
Shares
$500,000
$400,000
$300,000
$200,000
$100,000
$1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: JANA Corporate Investment Services, data as at 31 December 2014. Tick marks indicate 1 January. Australian Shares: ASX All Ordinaries
Accumulation Index.
7
Own or loan?
Income and growth of a term deposit with
NAB vs owning NAB shares
Investment of $10,000 in December 1989 – December 2014
$3,500
$80,000
NAB - Dividends
$2,500
Term Deposits - Interest
$70,000
NAB - Capital value
$60,000
Term Deposits - Capital Value
$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
Source: Calculations by JANA Corporate Investment Services as at 31 December 2014. Based on data from FactSet and Reserve Bank of Australia .
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 2014
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 14
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’ 9
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
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
$700,000
$607,774
$600,000
Australian
Shares
Cash
$500,000
$400,000
$300,000
GFC
$287,341
$200,000
$100,000
$1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: Factset, based on market index data updated to 31 December 2014. Australian shares: ASX All Ordinaries Accumulation Index. Cash:
Bloomberg AusBond Bank Bill Index
10
The impact of inflation
Value of investment (above inflation)
Cash vs Australian shares
Source: Data calculated over 10 year periods by JANA Corporate Investment Services 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
Missing the best days in the market
Australian shares and performance return
Value of $10,000 invested for 20 years (Dec1994 - Dec 2014)
$70,000
$60,000
8.91% return
$63,463
$50,000
6.38% return
$40,000
$39,640
4.43% return
$30,000
$27,427
$20,000
2.81% return
$20,036
1.41% return
$15,239
$10,000
0.14% return
$11,853
$0
0
10
Data: All Ordinaries Accumulation Index
20
30
Best days removed
40
50
Calculations by JANA Corporate Investment Services using data as at 31 December 2014. The ‘market’ is the Australian share market and is
represented by the ASX All Ordinaries Accumulation Index.
12
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: JANA Corporate Investment Services.
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
The chaser moves in
and out of the market
by investing in last
year’s best performing
asset class
$3,000,000
$2,500,000
$2,000,000
Balanced investor –
Staying fully invested
$3,415,607
$1,500,000
$1,529,074
$1,000,000
$500,000
Strategic Balanced Portfolio
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
$-
The Chaser
Source: Calculations by JANA Corporate Investment Services. Data as at 31 December 2014, based on market index data. All Ordinaries Accumulation Index, MSCI
World Gross Accumulation Index ($A), Bloomberg AusBond Composite Bond Index (ASAM) (Commonwealth Bank Bond Accumulation Index prior to September
14
1989), S&P/ASX200 Property Accumulation Index (Listed Property Trust Accumulation Index prior to July 2000), Bloomberg AusBond 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
The value of $10,000 invested in 1986
Source: JANA Corporate Investment Services, data as at 31 December 2014. Tick marks indicate 1 January. Australian Shares: ASX All
Ordinaries Accumulation Index. Global Shares: MSCI World Index ($A)
15
Following the latest trend – tech boom
The impact of the tech boom and media hype
The value of $10,000 invested in November 1984 (dividend income not included)
$250,000
$200,000
Companies began to
fold and investors
started to panic
Investors went into a frenzied
buying spree. Invested heavily in
companies without fully
understanding the companies
they were investing in.
$150,000
$100,000
$50,000
Source: Calculations by MLC, based on data from Factset
16
Source: FactSet and JANA Corporate Investment Services. Technology stocks: NASDAQ Composite Index.
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
$0
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 $282,045 compared to
$147,040 if you moved your money to a term deposit.
$350,000
Global shares
$282,045
$300,000
$250,000
$200,000
$150,000
Lehmans
$147,040
$100,000
$50,000
$0
Source: JANA Corporate Investment Services. Data as at 30 June 2015. MSCI World Index (hedged - $A). Term deposits: 1 year bank’s term
deposit ($10,000) – Reserve Bank of Australia
17