AJ Bell’s Investor Strategy League calculates the performance of 27 different investment strategies, and ranks them according to their ten and one year performance. The analysis is conducted in sterling terms, representing total returns for UK investors. Highlights of the 2023 report include:
- Risky technology strategies top the 10 year performance table despite the 2022 sell-off
- Safe havens like cash, bonds and gold have been left far behind
- £10,000 invested in a cash ISA 10 years ago would now be worth £11,200 compared with £29,850 from a global passive fund
- Value still trails growth by a large margin
- Performance chasing has wiped the floor with bargain hunting over 10 years
- The Vice fund has almost caught up with more virtuous ESG funds
- Warren Buffett shows he’s still a top dog, but a strong dollar has helped
Laith Khalaf, head of investment analysis at AJ Bell, comments: “There was a big sell off in riskier areas of the market in 2022, but that hasn’t knocked risk-hungry strategies off their perch when looking at performance over the last decade. Meanwhile low-risk safe havens have not served investors particularly well over a 10 year horizon. A typical Cash ISA has returned just 12%, and an investment in UK government bonds has returned just 3%, compared with CPI inflation over the same period of 30%. Perhaps more galling for bond investors is the 23.9% fall in the average gilt fund in 2022, an extremely steep loss for an asset that is generally held for its lack of volatility.
“Looking back at performance can help to build a picture of where long term returns are likely to be harvested, but it doesn’t provide an infallible guide to the future. That is particularly the case now, a point at which we are departing the era of cheap money at quite a clip.
“The future is likely to be kinder to bonds and cash returns, now that interest rates have risen, and by the same token riskier assets may find greater competition from lower risk assets dents their performance, potentially in both relative and absolute terms. The long run picture is quite clear though. Looking at data back to 1899, the Barclays Equity Gilt Study calculates that over ten years, there is around a 90% chance of UK equities outperforming bonds, and around a 75% chance of equities outperforming gilts. The next ten years is unlikely to substantially shift those odds, though it would also be unwise to bank on the extreme performance differentials of the last decade.”
AJ Bell Investor Strategy League Table
| Total return
10 Year |
Rank
(out of 27) |
Total Return
1 Year |
Rank
(out of 27) |
|
| Bitcoin | 162981.8% | 1 | -60.0% | 27 |
| Global technology fund | 466.3% | 2 | -27.8% | 26 |
| Warren Buffett | 369.7% | 3 | 16.3% | 2 |
| MSCI World Momentum Index | 301.2% | 4 | -7.4% | 12 |
| MSCI World Quality Index | 290.7% | 5 | -12.4% | 20 |
| Performance chasers | 289.5% | 6 | -1.6% | 9 |
| MSCI World Growth Index | 253.0% | 7 | -20.3% | 22 |
| Global passive fund | 198.5% | 8 | -8.8% | 13 |
| Global active fund | 176.3% | 9 | -12.3% | 19 |
| MSCI World Value Index | 171.8% | 10 | 5.3% | 6 |
| Global ESG fund | 166.2% | 11 | -13.7% | 21 |
| Vice fund | 154.9% | 12 | 16.3% | 3 |
| Global investment trust | 142.1% | 13 | -20.7% | 23 |
| Landlords | 134.8% | 14 | 6.8% | 5 |
| UK Small Cap investors | 130.8% | 15 | -25.2% | 25 |
| Egg spreaders | 127.1% | 16 | -9.6% | 14 |
| Contrarians | 108.1% | 17 | -1.7% | 10 |
| 60/40 portfolio | 89.1% | 18 | -11.2% | 17 |
| Income investors | 85.5% | 19 | -1.7% | 11 |
| Balanced managed pension fund | 71.7% | 20 | -10.0% | 15 |
| Herd investors | 67.9% | 21 | -11.1% | 16 |
| Random fund selector | 67.7% | 22 | -1.6% | 8 |
| Gold ETF | 43.1% | 23 | 11.9% | 4 |
| Institutional fund investors | 34.5% | 24 | -12.2% | 18 |
| Bargain hunters | 32.6% | 25 | 16.4% | 1 |
| Cash ISA savers | 12.0% | 26 | 0.8% | 7 |
| Bond investors (UK gilts) | 3.1% | 27 | -23.9% | 24 |
Total returns in GBP to 31 Dec 2022
Sources: AJ Bell, FE, Morningstar, Nationwide House Price Index, Refinitiv, Investment Association, Bank of England, Cointelegraph
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