Jul 06

Asset Class Performance for 2009-10

Overall it was a pretty good 12 months for all asset classes as they pretty much all achieved positive returns. Gold (USD) was the best with an annual return to the end of June 2010 of 34% whilst the only negative performer was the Australian Mercer Unlisted Property (pre-tax) index (looks like valuations finally caught up with them).

Despite the first six months of this calendar year producing around -10%, the Australian sharemarket finshed the financial year with 12 month performance of 13.8% (All Ords Acc Index). This was marginally better than the MSCI World Index (hedged) whcih returned 11.7% but not quite as good as the emerging markets, where the MSCI Emerging Markets Index returned 19.8% (despite China returning -1.8%).

For bond investors the year was a solid 7.9% for the Australian market (UBS Composite) and 10.0% for the global market (JP Morgan Broad WGBI ex-Aust index) and good old cash produced 3.89%.

With our solid economy and solid banking system our listed property market produced good returns and the ASX200 Property Trusts Accumulation Index had a 20.4% return…still a long way frion its 2007 high but I’m sure any long term listed property investor would be over the moon with that result.

Moving forward its a good bet that volatility will dominate the equity markets as deflation becomes a risk again in the developed markets keen on fiscal austerity. Removing stimulus before the end of an economic recovery is more likely to weaken the economy than provide growth. Either way, China’s growth will more important than ever to Australia and the rest of the world and if its GDP growth levels don’t look like hitting at least 8-9% then some more economic pain may be on the way for all.

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