Principles of Investments 2021

The key to successful investing isn’t predicting the future, it’s learning from the past and understanding the present. We present seven time-tested strategies for guiding portfolios towards tomorrow’s goals.

Investors should start early, invest with discipline and have a plan for their future.

People who are 65 today have a good chance of living to 80 or 90. But studies reveal many of us have not saved enough for our retirement years.

Global Allocation Fund

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The probability of one member of a 65-year old couple living at least another 25 years

Build a strong core with the

And saving more for it

Plan on living a long time

Inflation eats away at your purchasing power

Income Builder Fund

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The purchasing power of cash left on the sidelines, or the amount of goods that your money can buy, could decrease by more than half over a 40-year time horizon if inflation is 2% per year.

A risk-averse saver who decides to keep their savings in cash will no longer earn enough interest to beat inflation at today’s low interest rates.

Cash is rarely king

Equity Income Fund's

The

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Accumulated wealth from £5,000 invested annually growing at 5% a year

The power of compounding is so great that delaying investing by even just a few years, or choosing not to re-invest income, can make an enormous difference to your eventual returns.

Compounding is what happens when you earn returns not only on your initial investment, but also on any accumulated gains from prior years, allowing you to accelerate capital growth over time.

Compounding works miracles

Start early, and re-invest income

AVOID EMOTIONAL BIASES BY STICKING TO A PLAN

Past performance is not a reliable indicator of current and future results

Historical risk vs. return

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Therefore, if you want to target a higher level of return, you have to be willing, and able, to tolerate larger swings in the value of your investments along the way.

The strongest-performing investments since the early 2000s have tended to be those whose prices have been most volatile. Equities, for example have suffered some sharp swings in value, but they have delivered relatively strong annual returns compared to cash left in the bank.

Be realistic about your objectives and what you can achieve

Where U.S. investors are investing

United States global GDP

The United States accounts for only a small fraction of global GDP, yet the majority of U.S. investors are putting their money into U.S.-based assets.

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Though the U.S. accounts for only 1/3 of global capital markets, Americans concentrate 70% of their investments at home

Another costly and common investing bias: investing in what’s familiar.

Don’t let biases—home-country or otherwise—sway your better judgment.

Returns and risks generally go hand in hand

JPIN ETF

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of the last 35 years ended in positive returns for UK stocks

Close to

Hedged Equity Fund

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Despite suffering intra-year declines every calendar year since 1986, the equity market still recovered to deliver positive returns over two thirds of the time.

Plan on riding out volatile market periods. While the market’s ups and downs are hard to predict, sharp declines are a fact of life and should be expected.

Keep your head when all about you are losing theirs

Volatility is normal

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While markets can always have a bad day, week, month or even a bad year, history suggests investors are much less likely to suffer losses over longer periods. It’s important to keep a long-term perspective.

Selling after the market has experienced a large fall is normally the wrong strategy as investors can lock in losses and miss out on the subsequent recovery.

Staying invested matters

Timing the market is difficult

STAYING INVESTED MATTERS

Throughout history, a diversified portfolio of stocks, bonds and other asset classes has helped to limit sharp swings in returns.

Despite a tumultuous ride for investors over the past 10 years, our analysis shows that a diversified portfolio has provided a much smoother ride than investing in stocks alone.

Don’t put all your eggs in one basket

STAYING INVESTED MATTERS

A blend of stocks and bonds has not suffered a negative return over any five-year rolling period in the past 70 years

70 Years

stocks

bonds

While markets can always have a bad day or even year, history suggests investors are less likely to suffer losses over longer periods.

Good things come to those who wait.

67 Years

Get invested, stay invested with the

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Diversification works

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Dive deeper into the data

Download the Guide to the Markets

EXPLORE FULL GUIDE TO THE MARKETS

DIVE DEEPER INTO THE DATA.

EXPLORE THE CHARTS.

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STAYING INVESTED MATTERS

Good things come to those who wait.

While markets can always have a bad day or even year, history suggests investors are less likely to suffer losses over longer periods.

It’s always darkest just before dawn.

By missing some of the market’s best days, investors can lose out on critical opportunities to grow their portfolio. Market timing can have devastating results.

Six of the U.S. market’s 10 best days occurred within two weeks of its 10 worst days.

Fully invested

7.20% RETURN

$40,135

Missed 60 best days

$2,834

Returns on $10,000 invested in the S&P 500: January 1, 1998-December 29, 2017

STAYING INVESTED MATTERS

Diversify your bonds with the

Global Bond Opportunities Fund

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DIVERSIFICATION WORKS

Time and again, diversification serves its purpose.

In the last 15 years, the world endured multiple natural disasters and geopolitical conflicts and two major market downturns.

Through it all, a diversified portfolio of stocks, bonds and other uncorrelated asset classes proved itself a winner.

Annual return

on a well-diversified portfolio, over the past 15 years.

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Hedge the equity market without timing it with the

Hedged Equity Fund

VOLATILITY IS NORMAL; DON’T LET IT DERAIL YOU

Seeing through the noise.

Plan on riding out volatile market periods. Pullbacks hapeen.

Markets suffered double-digit declines in 21 of the last 38 years, yet still ended those years with positive returns 75% of the time.

ended in positive returns

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Seek a smoother ride in international equity markets with the

JPIN ETF

AVOID EMOTIONAL BIASES BY STICKING TO A PLAN

Don’t let biases—home-country or otherwise—sway your better judgment.

Another costly and common investing bias: investing in what’s familiar.

Though the U.S. accounts for only 1/3 of global capital markets, Americans concentrate 75% of their investments at home.

WATCH VIDEO

LEARN MORE

The United States accounts for only a small fraction of global GDP, yet the majority of U.S. investors are putting their money into U.S.-based assets.

United States global GDP

Where U.S. investors are investing

In good times and bad, stay on course.

Investors pay a heavy cost when their feelings dictate (often poorly timed) decisions. Following a plan can cut losses when markets are down and quicken recovery when markets turn around.

A portfolio that included bonds saw reduced losses during the financial crisis, enabling these diversified portfolios to recover much faster than a portfolio of stocks alone.

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Over 20 years

Dalbar's study titled "Quantitative Analysis of Investor Behavior" credits these numbers in part to badly timed - and often emotionally driven - investment decisions.

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HARNESS THE POWER OF DIVIDENDS AND COMPOUNDING

Investing in risk assets—and reinvesting dividends—can be powerful moves.

Reinvesting dividends lets earnings continue to earn.

Compounding can make an exponential difference over time, compared to stock price appreciation alone.

An initial investment of $10,000 in 1970 in the S&P 500.

conservative approach to

The equities pays dividends

Equity Income Fund's

There is no guarantee that companies will declare, continue to pay or increase dividends.

CASH ISN'T ALWAYS KING

Cash (and equivalents, like CDs) don’t offer the “safe haven” they once did.

Ultra-low interest rates mean savings currently in cash are losing value by not keeping up with inflation, yet more than $15 trillion in cash still sits on the sidelines.

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Income Builder Fund

Income earned by $100,000 investment in a 6-month CD

Even when, like now, a lot of people are relying on it.

PLAN ON LIVING A LONG TIME

And saving more for it.

People who think they need more than 500k for retirement

People who are 65 today have a very good chance of living to 80 or 90. But studies reveal many of us have not saved enough for the retirement years.

Investors should start early by saving more, investing with discipline and having a plan for their future.

WATCH VIDEO

Seven time-tested strategies for guiding investors and their portfolios through challenging markets and toward tomorrow’s goals.

-6.11% RETURN

£200,000

£300,000

£400,000

£500,000

£600,000

£700,000

£100,000

Starting at age 25

Starting at age 35

Annualised volatility and returns since 2004

10%

12%

14%

Cash

Global equities

Volatility

Returns

Past performance is not a reliable indicator of current and future results

1-year time horizon

10-year time horizon

Historical returns when investing over different time horizons

Range of annualised returns from a 50:50 mix of stocks and bonds since 1950

49%

-24%

Range of historical returns

17%

49%

-24%

equities pays dividends

conservative approach to

Higher risk, higher return

Calendar year performance since 1986

Range of historical returns

Download the Guide to the Markets

For illustrative purposes only

Return

Time

Starting at age 35

Starting at age 25

Diversified portfolio

Stocks

Past performance is not a reliable indicator of current and future results

Dalbar's study titled "Quantitative Analysis of Investor Behavior" credits these numbers in part to badly timed - and often emotionally driven - investment decisions.

Close to

Despite a tumultuous ride for investors over the past 10 years, our analysis shows that a diversified portfolio has provided a much smoother ride than investing in stocks alone.

Download the principles booklet for your clients

Download the Guide to the Markets

View the guide

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Income generated from £100,000 cash savings

2021

2001

£4,893

£1,233

£133

£2,318

Bank deposit income

Income required to beat inflation

2016

1990

€2.371

Bank deposit income

Income required to beat inflation

€2.371

€2.318

€133

Bank deposit income

Income required to beat inflation

Past performance is not a reliable indicator of current and future results

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