Lithuanian Investment Index

The Lithuanian Investment Index is developed by INVL Asset Management, one of the country’s leading asset management firms. It shows how returns on investments in the country’s four main asset classes have evolved since 1995.

Lithuanian Investment Index (1996–2017)





 

The index is calculated on the basis of investment returns for short-term debt securities and money market instruments (deposits), long-term bonds, stocks, and rental housing (as of 2016 calculated net of expenses), each of which is given equal weight. The index shows how the value of these investments has changed each year. Annual returns for the Lithuanian Investment Index and its constituent asset classes (1996–2017):

According to the index, the average return on investments in Lithuania in 2008–2017 was 3.9 per cent and exceeded the return on many analysed investments. For the period 1996–2017, meanwhile, the figure was 10.3 per cent, confirming the benefits of long-term investments.

In 2017, the return on the Lithuanian Investment Index was 6.3 per cent, and investments in stocks in the country stood out with a gain of 17 per cent. Meanwhile, the return on rental housing was 7.7 per cent. Long-term Lithuanian bonds fell short of the country’s 3.7% inflation rate with a return of 0.4%, and deposits gave no return.

The main investment return and inflation in Lithuania in 1996–2017



 

Return on rental housing investments was highly volatile: for the period 1996–2017 it had an average annual return of 14.3 per cent, and in 2008–2017 reached just 1.2 per cent.

The return on Lithuanian stocks in 2017 outperformed European stocks, but was lower than the return of global stocks. In 1996-2017 the return of Lithuanian stocks was bigger than the return of global (7.3 per cent) and European (7.7 per cent) stocks.

Pension funds earned a 4.7 per cent average annual return from the time of their creation in 2004 through 2017. For 2008–2017, the return was 3.5 per cent, higher than that for deposits, Lithuanian companies' stocks, rental housing and than inflation.

Looking at the performance of safe investments – bonds and deposits – in Lithuania, the USA, and Germany, the best performers in 1996–2017 were Lithuanian long-term bonds, which returned 6.7 per cent. The 0.4 per cent return that Lithuanian bonds earned in 2017 exceeded U.S. bonds’ 2.8 per cent gain, while the return on German bonds was a negative 0.8 per cent. Bonds are currently seen as the asset class for which it’s not possible to predict similar historical returns over the short-term and medium-term.

Individual asset classes yield different returns in different periods, so to reduce risk and sustain investment gains, spreading investments over a variety of areas is recommended.

Average return by asset class

Asset class 1996–2017 average, per cent 2008–2017 average, per cent 2017 return
Housing prices and rental income (net of expenses starting in 2016) 14.3 1.2 7.7
Housing prices in Lithuania 6.4 -3.7 3.6
Lithuanian companies' stocks 9.3 2.4 17.0
Lithuanian long-term bonds 6.7 4.2 0.4
Short-term debt securities and money market instruments (deposits) 4.8 2.1 0.0
2nd pillar pension funds 4.7* 3.5 4.5
Inflation 3.3 2.8 3.7
Lithuanian Investment Index 10.3 3.9 6.3

* Since creation in 2004.

More information can be found in the INVL Asset Management press release.

The Lithuanian Investment Index is an initiative of INVL Asset Management. Any use of the data herein must identify INVL Asset Management as the source.