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 1996.

 

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.

Returns on the Lithuanian Investment Index and its component asset classes are presented through the end of 2019: from the inception of the index in 1996, over 10 years (2010-2019), and in 2019.



According to the index, the average annual return on investments in Lithuania during the period 1996-2019 was 9.7%, while in 2010-2019 it was 5.7%.

In 2019, the Lithuanian Investment Index had a gain of 7.1%, led by stocks in the country, which earned a return of 15.4%, and, in second place, rental housing, with a gain of 11.5%.

Inflation in 2019 was 2.2% – a rate the country’s long-term bonds, which earned 1.5%, and deposits, which had a 0% return, failed to surpass. 

Long-term return on the Lithuanian Investment Index’s asset classes

The return on Lithuanian company stocks both in 2019 and over the past decade was the highest among the asset classes analysed. Last year the Lithuanian stock market grew 15.4%. Despite fluctuations, looking at the last 24 years, the average return on stocks in the country was 8.9% per year, and over the last 10 years it was 10.5%. In the first quarter of 2020, the country’s stocks suffered a drop of 15.1%, but that only had a 0.8 percentage point impact on the long-term average return since 1996, which shrank to 8.1%.

The return on rental housing in Lithuania in 2019 ranked second among investment classes: the value of investments in housing last year grew 7.2% or, taking rental income into account as well, 11.5%. Looking at the 10-year period (through the end of 2019), the average annual return on rental housing in the country was 6.8%, and over the 24 years for which the index has been calculated, the average annual return on rental housing was the highest among all asset classes in the country at 13.9%. In the first quarter of 2020, despite contraction the return on rental housing remained positive and thus the long-term annual return since 1996 decreased only 0.1 percentage point to 13.8%.

Looking at the performance of safe investments – long-term bonds – in Lithuania, in the period 1996-2019 their average annual return was 6.2% and in 2010-2019 it was 3.5%. Even though the return on Lithuania’s long-term bonds increased in 2019 to 1.5%, for the last three years it has not exceeded inflation. The return on Lithuanian bonds exceeded inflation only for the 24-year and 10-year periods. In the first quarter of 2020, the return on the country’s bonds changed only slightly, with the result that the long-term return from 1996 to the end of the first quarter of 2020 decreased by 0.1 percentage point to 6.1%.

The return on deposits in Lithuania in 2019 stayed at the level of zero for a fifth year in a row and was also the same in the first quarter of 2020, hence that asset class’s long-term average return since 1996 was unchanged and remained at 4.4%. As at the end of 2019, the return on deposits in the country exceeded inflation only over the 24-year period, while in 2019 and over the past decade it fell short of that level.

The return on Lithuania’s 2nd pillar pension funds

For these funds, 2019 was a year of record growth – nearly 20%, due to which the funds’ average annual gain from their creation in 2004 through the end of 2019 was 5.2%



Still, in the first four months of 2020 these funds, like all the financial markets, suffered a decline. While in the first quarter the drop was 14.8%, after a more favourable April, according to the data of the Lithuanian Association of Investment and Pension Funds, the change for the first four months of the year shrank to -8.7% and had a 0.7 percentage point impact on the average annual gain since the funds began operating in 2004, which fell to 4.5%.

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.

Return by asset class in Lithuania

Asset class 1996–2019 average, % 2010–2019 average, % 2019 return, % 2020 1st quarter, % 1996-2020 1st quarter average, %
Housing prices and rental income (net of expenses starting in 2016) in Lithuania* 13.9 6.8 11.5 2.3 13.8
Housing prices in Lithuania* 6.4 2.1 7.2 1.2 6.3
Lithuanian companies' stocks 8.9 10.5 15.4 -15.1 8.1
Short-term debt securities and money market instruments (deposits) 4.4 0.7 0.0 0.0 4.4
Lithuanian long-term bonds 6.2 3.5 1.5 -0.2 6.1
Lithuanian 2nd pillar pension funds 5.2** 5.6 19.9 -8.7*** 4.5***
Inflation 3.2 1.8 2.2 0.6 3.2
Lithuanian Investment Index 9.7 5.7 7.1 -3.2 9.5

* Housing acquisition and rental returns calculated on the basis of Ober-Haus data;
** Since creation in 2004;
*** Until the end of April 2020.

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.

Information is provided for information purposes and cannot be construed as a recommendation, offer or invitation to invest in funds or other financial instruments managed by INVL Asset Management. When investing, you assume the investment risk. Investments can be both profitable and loss-making, you may not obtain financial benefits and you may lose some or even all of the invested amount. Past results of investments do not guarantee future results. When making a decision to invest, you should assess all the risks associated with investing and the key investor information documents. INVL Asset Management is not responsible for any inaccuracies or changes in this information or for losses that may arise when investments are based on this information.