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The top investment strategies of the last decade revealed

Investors in Latin American funds in 2022 would have returned 16.4% last year...but tech stocks reign supreme over the past decade

Investors who backed tech stocks over the past decade would have enjoyed the highest returns, new research shows.

Although the performance of tech-focused funds has been dismal over the past year, they haven’t been knocked out of the top spot when it comes to performance over the past decade.

AJ Bell’s analysis reveals that investors who invested in the L&G Global Technology fund reportedly saw a 466.3% return on investment since 2013.

Investors in Latin American funds in 2022 would have returned 16.4% last year...but tech stocks reign supreme over the past decade

Investors in Latin American funds in 2022 would have returned 16.4% last year…but tech stocks reign supreme over the past decade

Bitcoin investors have enjoyed by far the best returns over the past decade.

Someone who invested £1,000 at the start of 2013 would be sitting on £1.6 million today, despite the cryptocurrency having fallen 60% over the last year.

“Those who have ignored the crypto craze can take solace in the fact that the number of Bitcoin believers who have captured the full ten-year return is probably as small as that number is large,” said Laith Khalaf, chief executive. of investment analysis at AJ Bell.

“Unlike Bitcoin, many investors will have ridden the tech wave, and so this category should be considered the most successful mainstream investment strategy of the past decade.”

Unsurprisingly, growth stocks have an 80% performance lead over value since 2013 despite the MSCI World Growth Index’s return of -20.3% last year.

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Khalaf said: “The changing of the guard may yet last, with rising interest rates potentially acting as a cornerstone for growth company valuations.”

In the face of higher inflation and economic uncertainty, it was the undervalued and so-called sin stocks that posted the strongest returns last year.

Big winners: Bitcoin, L&G's Global Technology Fund and then Warren Buffett have all proven successful investment strategies over the past 10 years

Big winners: Bitcoin, L&G’s Global Technology Fund and then Warren Buffett have all proven successful investment strategies over the past 10 years

AJ Bell’s analysis finds that investors who invested in the “bargain hunter” strategy – investing in the worst performing sector, in this case Latin America – would have returned 16.4% the last year.

The second best-performing strategy was trailing top investor Warren Buffett, whose Berkshire Hathaway fund that backs Apple, Bank of America and Chevron returned 16.3% last year.

In dollars, Berkshire Hathaway rose 4% last year, still outperforming most of the market.

Laith Khalaf, head of investment analysis at AJ Bell, said: “The currency also contributed to longer-term returns, with ten-year dollar returns hitting a still healthy 249.6%.

“This monetary bonanza for UK investors is common across many Investor Strategy League categories, with the pound rising from around $1.60 a decade ago to around $1.20 today. This shows how much British investors have taken advantage of the weakness of the pound, which should not be counted on to continue indefinitely.

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A basket of so-called sin stocks selling tobacco and fossil fuels also returned 16.3% in 2022 and is starting to catch up with ESG funds over 10 years.

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With portfolios filled with growth stocks, sustainable funds have thrived in a low rate environment, but over the past year investors have shifted from growth to value.

Last year, the global ESG fund returned -13.7%.

An investment in gold came third, as it tends to rebound in times of volatility and is generally considered a safe-haven asset.

An investor in a physical gold ETF reportedly saw a 12% return last year

Over a longer period, gold has not proven to be as lucrative, returning 43% over a decade.

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“His poor performance over the last decade is heavily influenced by the fact that he hit high marks for ten years, before falling precipitously,” Khalaf said.

Cash and bonds, which also considered safe assets, have also performed poorly over the past decade.

“Cash has been a bad asset to hold over the last ten years, with £10,000 invested in a cash Isa 10 years ago now worth £11,200, compared to £29,850 in a passive fund invested in the market global stock exchange,” Khalaf said. .

“The weak performance of cash in 2022 may come as a surprise, given that it was a year of sharply rising interest rates. Last year’s returns were hampered by the fact that average Cash ISA rates did not not kept pace with interest rate hikes, and even the most competitive offers.

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“Seeking the best cash rates is always a good idea, but in 2023 it should be a more rewarding practice than it has been for a considerable time.”

THE BEST INVESTMENT STRATEGIES
Total return over 10 years 1 year total return
Bitcoin 162981.80% -60.00%
Global Technology Fund 466.30% -27.80%
warren buffet 369.70% 16.30%
MSCI World Momentum Index 301.20% -7.40%
MSCI World Quality Index 290.70% -12.40%
Performance hunters 289.50% -1.60%
MSCI World Growth Index 253.00% -20.30%
Global Passive Fund 198.50% -8.80%
Global Active Fund 176.30% -12.30%
MSCI World Value Index 171.80% 5.30%
Global ESG Fund 166.20% -13.70%
Vice-fund 154.90% 16.30%
Global Investment Trust 142.10% -20.70%
UK small cap investors 130.80% -25.20%
Egg spreaders 127.10% -9.60%
Contrarians 108.10% -1.70%
60/40 Portfolio 89.10% -11.20%
Income investors 85.50% -1.70%
Balanced management pension funds 71.70% -10.00%
herd investors 67.90% -11.10%
Random fund selector 67.70% -1.60%
Gold ETFs 43.10% 11.90%
Institutional fund investors 34.50% -12.20%
Bargain hunters 32.60% 16.40%
Fixed income investors (UK gilts) 3.10% -23.90%
Source: AJ Bell

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