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HI Paul, in the last 12 months through my Super, I have done very well through a High Growth Index Fund (underlying fund manager Blackrock), better than I have actually done through another investment share picking. Generally speaking, do you think index funds are less likely to perform as well as they have these past 12 months, given many markets are now back to pre-Covid levels? I’m debating which strategy to focus on over the next 12 months. Thank you.
A: I think you will find that the ‘Blackrock High Growth Multi-Index Fund” does not just have aussie shares but a diverse asset mix of Australian shares, international shares, international property, emerging market equities, gold, Australian and international fixed interest etc. It has a weighting of 85% to growth assets and 15% to defensive assets.
Over the long term, you would expect a fund with a 85%/15% weighting to outperform a fund with (say) a 70%/30% split. But, there will be more volatility, and more years of negative returns.
As for styles, with an index fund, you are guaranteed to get the index return, less the management fee. Nothing more, nothing less. Actively managed funds aim to outperform the index. Some do, some don’t.
