In this episode of “What’s the Risk?” we explore the historical performance of the MSCI World ex Australia Index (net div., AUD), a global benchmark tracked by Vanguard’s VGS ETF. Since its inception in 1975, this index, covering large- and mid-cap stocks across 22 developed markets, has navigated significant market cycles, offering a compelling case study for long-term investors.
We analyze its ups and downs, including short- and long-term periodic performance, growth of wealth, range of returns, average returns, rolling annual returns, largest drawdowns, and recovery periods. Additionally, we compare its risk-return profile to other asset classes like bonds and Australian equities to highlight its role in diversified portfolios.
A key focus is the turbulent 2000s, a decade that tested investor patience. The dot-com bubble’s burst in 2000, followed by the 9/11 terrorist attacks, subsequent wars, and the 2008 Global Financial Crisis, led to sharp declines, particularly in the U.S., which dominates the index. We examine the magnitude of these drawdowns, the time required for recovery, and how dividends cushioned total returns. Despite these challenges, the index’s long-term growth underscores the value of staying invested through volatility.
Watch index that tracks Vanguard’s VGS ETF video.
This represents general information only. Before making any financial or investment decisions, I suggest you consult a financial adviser to take into account your personal investment objectives, financial situation and individual needs. Anyone looking to build a portfolio should seek financial advice to find out which strategy is right for them, if you are a high net worth investor looking financial advice then you should consider Australia’s best financial advisers, they can help you identify your goals and put in place a reliable strategy to pursue them.
