ASX ETF provider Vanguard has released a new annualised 10-year growth forecast for ASX shares.
Based on in-house modelling, Vanguard predicts that the S&P/ASX 300 Index (ASX: XKO) will return average capital growth of 4.7% to 6.7% per year (excluding dividends) for the next decade.
How does the forecast for ASX shares compare to global equities?
The forecast for ASX 300 shares compares very favourably with other asset classes for which Vanguard has also provided a 10-year annualised forecast.
Over the next decade, Vanguard forecasts:
- Capital growth of 4.3% to 6.3% per year for unhedged global equities (ex-Australia)
- Capital growth of 4.1% to 5.1% for Australian aggregate bonds
- Capital growth of 4.3% to 5.3% for hedged global bonds (ex-Australia)
Interested in investing in ASX 300 shares?
Vanguard runs an exchange-traded fund (ETF) that seeks to track the performance of the ASX 300 before fees.
It's called the Vanguard Australian Shares Index ETF (ASX: VAS), and it's Australia's largest ETF with a market capitalisation of $16.41 billion.
By investing in the ASX 300, investors gain exposure to blue-chip mega shares like BHP Group Ltd (ASX: BHP) and Commonwealth Bank of Australia Ltd (ASX: CBA), as well as 100 up-and-coming companies that fall just outside the benchmark ASX 200 (and arguably have more room for future growth).
These include Megaport Ltd (ASX: MP1), Temple & Webster Group Ltd (ASX: TPW), Droneshield Ltd (ASX: DRO), Vulcan Energy Resources Ltd (ASX: VUL) and Aussie Broadband Ltd (ASX: ABB) shares.
The VAS ETF closed at $102.74 yesterday, up 0.98%.
Yesterday, Vanguard announced that the VAS ETF will pay a distribution of 103.3194 AU cents per unit on 16 October.
What's the outlook for the Australian economy?
Vanguard's global economics and markets team has also released its assessment of the Australian economy, noting that it is currently growing at its slowest pace in decades.
The latest gross domestic product (GDP) data from the Australian Bureau of Statistics revealed just 1% annual growth, and just 0.2% growth over the June quarter.
Vanguard also noted that inflation was "falling only gradually," which would likely prevent the Reserve Bank of Australia (RBA) from cutting interest rates this year.
Looking ahead, the Vanguard team expects:
- Full-year economic growth of about 1%
- Unemployment to rise to about 4.6% by year's end (it was 4.2% in August)
- Inflation will not fall to the midpoint of the RBA's 2% to 3% target range until 2025 (3.4% in August)
- The Reserve Bank will start cutting interest rates next year
How are ASX 300 shares performing in 2024?
In the year to date, the ASX 300 has lifted by 7.55% to close at 8,143.3 points yesterday.
The S&P/ASX 200 Index (ASX: XJO) has also risen by 7.55% and finished at 8,203.7 points on Thursday.
The S&P/ASX All Ordinaries Index (ASX: XAO), which captures the 500 largest listed companies, is up 7.57% to 8,462.8 points.
