As stock markets roar back to life following the inflation-led slump, some might assume all investments rise in tandem. But unfortunately, that is not the case. Some investments are better at benefitting from the recovery than others. In this brief analysis, I examine three different investments and how they have performed over the course of the last year.
- Buyout Bond
The analysis covers the period 25/01/2023 – 25/01/2024
The rate of difference between each of the funds is remarkable and also, a cause for concern.
So here goes:
- + 2.14% – Buyout Bond
- + 4.12% – PRSA
- + 18.14% – Non-pension ETF
Value percentage change January 25, 2023 – January 25, 2024
Investment performance analysis
What is interesting about the Buyout Bond is it includes a good spread of investments in both type and location. In theory, it was constructed to offer better fund growth potential than a standard PRSA. But it has done poorly. In fact, it has underperformed the PRSA significantly, even though PRSA investment options are restricted.
The fact the Buyout Bond missed out on the broad market recovery and growth in 2023 is of great concern. So too is the fact the Buyout Bond failed to offer insulation to a fall in value in 2022. On that basis, it is a BIG DAMP SQUID!
That said, the PRSA has proven to be resilient. It is a workhorse of the pensions market, especially for those that are either self-employed or work for an employer that does not offer a company-sponsored pension plan. In this case, the PRSA growth has kept up with inflation so on that basis, it deserves a BIG PAT ON THE BACK!
But the real magic took place in the ETF. It grew a whopping 18.14%. The underlying funds are all passively managed, but its index-linked so a lot of the growth comes from some of the biggest and best stocks on the market at present.
For anyone looking to invest, it pays to understand the nature, makeup, spread and cost of the investments before they part with their money.
Frank Conway is a Qualified Financial Adviser and Founder of MoneyWhizz.