Indexing was first introduced in the United States in the early 1970s as an alternative to traditional active investing.  Indexing is now an important investment strategy for institutional and individual investors around the world.  In Australia, index funds now exceed $120 billion or 10 per cent of the total investment management market. So, what does indexing offer your clients?
 

Long-term performance history

Indexing has a proven long-term performance history in all the major asset classes. Historically, few active managers have been able to sustain above benchmark returns after costs over the long term.

If you can't beat the index why not join it. 

Past performance is not an indicator of future performance. Please note that index returns respresent those of the relevant index and are not the returns of our index funds. Click here  for further information and assumptions.

Low costs

Indexing's 'buy and hold' approach can significantly reduce the cost of investing over time. This combined with low management costs means your clients can keep more of the returns they earn.

Tax-effective

Tax can potentially take the largest chunk out of your clients' investment return so it pays to focus on real returns, after-tax. Because of its long-term nature, indexing benefits from capital gains discounts, which can improve after-tax returns. 

Diversification

Index funds invest in all or most of the securities in an index, so they provide diversification. Diversifying across a range of asset sectors, industries and securities reduces market risk and can improve your clients' performance potential.

Simplicity

It is very difficult to continually pick winners and outperform the market over the long term. Index funds take the guesswork out of investing by providing a low cost way to gain exposure to investment markets.  

Click here to learn more about indexing.

Graph assumptions
Index returns do not take account of any fees, expenses or taxes and assume the reinvestment of all income. Median manager returns are shown after standard fees and expenses but do not take into account taxes or rebates and assume the reinvestment of all income.

Data is sourced by Vanguard using Mercer retail survey data. Mercer was paid a fee for the survey results but Vanguard did not commission the survey.

Data based on a survey of between 14 and 51 funds, including Vanguard, depending on the asset class. The results would be different if more or different funds or rebates were considered.Index returns are based on the following indices:

Australian Cash Funds: UBS Australian Bank Bill Index
Australian Listed Property Funds: S&P/ASX300 Property Accumulation Index
Australian Share Funds: S&P/ASX300 Accumulation Index
Overseas Share Funds (Unhedged): MSCI World ex Australia Index
Conservative (Moderate) Funds: Diversified Benchmark
Growth Funds: Diversified Benchmark
High Growth (Aggressive) Funds: Diversified Benchmark