Morningstar runs the numbers

We take a numerical look through this week's Morningstar research. Plus, our most popular articles and videos for the week ended 5 March.

$96 billion

After a record year for inflows in 2020, ETFs have hit the ground running in 2021, with high inflows pushing the sector to a new all-time high of $96 billion in January, writes Anthony Fensom. Over the past 12 months, the sector has grown by 47 per cent, adding more than $30 billion in assets, according to BetaShares. "By sector, the top inflows for January were international equities (around $867 million) and Australian equities ($315 million), followed by fixed income ($239 million). Outflows were limited, with only specific outflows such as for resources exposures linked to crude oil following strong price gains, BetaShares reported."

22

The median price/sales ratio for the companies in the Cathie Wood-led fund, ARK. This as opposed to 2.5 for the overall stock market, writes John Rekenthaler. "Only one third of those businesses are currently profitable. In short, these funds will terrify those with a strong sense of investment history. Finance professors widely prefer cheap, unheralded companies to stocks that carry steep prices and similarly steep expectations. Practitioners tend to be swayed more by personal experience than do academics, but most veterans reach a similar conclusion: Emerging businesses usually disappoint."

50 per cent more

Someone born in 1947 needs roughly 50 per cent more capital than a person born in the previous generation, and for someone born in 1977, the extra capital needed is about 30 per cent, says Philip Petursson, chief investment strategist and head of capital markets research at Manulife Investment Management. But with the longevity risk comes a shortfall risk: the possibility of outliving one's savings. "In fact, to cover for the longevity and shortfall risks, and considering that 94 years is an average life expectancy, one should develop one's retirement plan with the expectation of living to 100." A recent survey of 1,929 respondents by Fidelity (Retirement 20/20) shows that only 17 per cent plan that far out. The largest cohort (53 per cent) plans between 85 and 95 years of age, and 28 per cent plans between 70 and 80 years of age, reports Yan Barcelo.

30,000

On 15 February 2021, the Japan Nikkei Index hit 30,000 for the first time since 1990, writes Hasan Tevfik from Senior Research Analyst at MST Marquee. "Media reports celebrated the milestone. However, we think it highlights the misery Japanese equity investors have endured for more than three decades now. The Nikkei is still 23 per cent below the all-time-high achieved in December 1989 at the peak of one the greatest equity bull markets in history. Since then the Japanese equity investor has endured an annualised capital loss of 0.2 per cent and a paltry total return of 1.1 per cent a year with dividends. How did this happen? Can it happen in Australia?"

3.1 per cent

Australia's 4Q20 GDP reading, which comfortably beat expectations in the mid-2s and for 2020 a contraction of 1.1 per cent, writes Peter Warnes. The recovery continued from 3Q's +3.4 per cent with solid momentum going into 2021. The surprise came from the expenditure or spending components, including households and business, thanks to widespread government support programs. Household consumption increased 4.3 per cent from 3Q helped by the re-opening of Victoria. Overall spending was underpinned by JobSeeker, which supported incomes and boosted savings in 2Q amid restricted spending options including overseas travel, hospitality, and entertainment.

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