In his bestselling book, A Random Walk Down Wall Street, Burton Malkiel proved that Index Funds, historically, have consistently outperformed hedge funds. In 2014, as well, Malkiel’s hypothesis holds true, with many Index funds beating all expectations. Here are the best and worst performing indices from last year!
The highest performing Index Fund of 2014 was the Merval Index of Argentina, logging a 58.9% growth for the year. The Merval Index is a price-weighted index updated every three months based on the best performing stocks of Argentina’s primary stock exchange, the Buenos Aires Stock Exchange.
In close second to Argentina’s economic growth, China’s Shanghai Composite Index experienced a 52% increase in 2014. Analysts are skeptical whether it’s fair to compare the two indices, seeing as the total market cap (number of shares multiplied by individual share prices) of Argentina’s Merval Index is only $93.16 billion, dwarfed by the Shanghai Index, the fifth largest Index in the world.
Meanwhile, stock exchanges across the globe experienced fantastic growth: India (Up 29.93%), Pakistan (Up 25.69%), Turkey (Up 24.61%), Sri Lanka (Up 22.41%), the Philippines, (Up 22.01%), and Denmark (Up 21.28%).
The worst performing market in the world for 2014 was Russia, whose leadership paid a heavy price for invading Crimea, and refusing to withdraw. Russia’s leading Index Fund, the Russian Trading System Cash Index (RTSI), opened up 2014 trading at 1346, and closed up December at 742, a 44% decrease.
Meanwhile, in America, the S&P 500 reached record highs several times over the course of last year, hitting 2,093.55 on December 29th, 2014. In terms of actual growth, the S&P was up 12% over the course of the year, taking a spot behind 16 other nations which experienced superior index growth.
Best and Worst Performing Markets of 2014.
Comparing the American and Chinese Indices performances, Ryan Huang, a financial strategist for IG, says: “Asian markets have performed reasonably well this year. More than half have outperformed Wall Street and most of them have ended the year in positive territory.”
In the developing world, India’s S&P Sensex Index grew by 29%. Analysts are pointing to the low oil prices in the second half of 2014. As a major importer or oil, the reduced price saved India a lot of money. Analysts are also attributing the growth of the Sensex Index to the election of Narendra Modi, who is currently leading India’s most popular political party. Investors are optimistic about Modi’s reform agenda.
In Japan, the Nikkei 225 was experiencing a negative growth rate for most of 2014, but shot up by December, finishing off the year with a 7% annual growth rate.
