The MSCI World Return Triangle: What Historical Returns Really Show
The return triangle answers the one question every return statistic obscures: what would your investment have become — depending on when you got in and when you got out? For the MSCI World since 1970, that yields a matrix of thousands of holding periods. The patterns in it teach more than any average return.
How to read the return triangle
Each cell of the triangle shows the annualised return for one combination of entry and exit year. The diagonal holds the one-year returns — that is where chaos reigns: from around −40% in the financial-crisis year to over +60% in recovery phases. The further you move from the diagonal, the longer the holding period and the narrower the corridor of outcomes.
The core message of the data since 1970: over short horizons, the entry point completely dominates the result. Over 15 years and more there were historically — in DM/euro terms — practically no nominal loss periods left, and returns converged towards the long-run figure of roughly 7–8% p.a. nominal.
| Holding period | Historical range (p.a.) | Nominal losses |
|---|---|---|
| 1 year | around −40% to +60% | frequent |
| 5 years | around −7% to +25% | several periods |
| 10 years | around −2% to +17% | rare (e.g. dot-com entry in 2000) |
| 15+ years | around +2% to +12% | historically practically none |
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What the triangle shows — and what it does not
The triangle is a risk-framing tool, not a forecasting instrument. Three limits to keep in mind:
- Index survivorship: the MSCI World of 1970 had a different country and sector mix — Japan made up around 40% of the index in the late 1980s, today the US dominates at roughly 70%. Past corridors are no guarantee.
- Nominal vs. real: the cells show nominal returns. In high-inflation phases like the 1970s, real returns were considerably leaner than the triangle suggests.
- Pre-tax: German flat tax (26.375% incl. solidarity surcharge, less the 30% partial exemption) and the advance lump-sum tax reduce net returns — 7% nominal leaves roughly 5.5–6% p.a. after tax.
In practice: on a €100,000 lump sum, the triangle does not tell you what you will have in 15 years — it tells you that historically every 15-year period ended nominally positive and dispersion shrank drastically with time. How this combines with bonds at portfolio level is covered by the 60/40 portfolio; for product selection, see the global ETF comparison.
Frequently asked questions
From what holding period was the MSCI World historically always positive?
Looking at the history since 1970, holding periods of about 15 years and longer practically always ended nominally positive. That is an empirical observation, not a guarantee for the future.
Why do return triangles from different providers differ?
Differences come from currency (USD vs. DM/euro), gross vs. net index, cut-off dates and whether costs or taxes are included. The orders of magnitude and patterns are the same everywhere.
Can I use the triangle returns for my planning?
Only as rough guidance: historically around 7–8% p.a. nominal before taxes and inflation. For realistic planning, deduct taxes, costs and inflation and work with more conservative assumptions.
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