As part of our financial planning process, we have a tool that reports on the returns from asset classes over the past 30 years on a rolling 12 month period basis, quarter by quarter.
The most recent data is up to the end of December 2008. This provides us with 117 years worth of rolling data in this data set. The first year commences January 1979, the next year starts April 1979 with the last period commencing January 2008. Our firm also combines these asset classes to provide data on the performance of asset mixes over that 30 year period. The following table sets out the data for the past 30 years:
|
Asset Class or Portfolio Type |
Positive
Years |
Negative
Years |
Best
Year |
Average
Year |
Worst
Year |
|
Cash |
117 |
0 |
19.06% |
9.27% |
4.63% |
|
Fixed Interest (Local & Foreign) |
112 |
5 |
24.43% |
9.97% |
-5.62% |
|
Property (Listed or Direct) |
104 |
13 |
53.32% |
10.58% |
-53.99% |
|
Australian Equities or Shares |
89 |
28 |
85.44% |
12.58% |
-40.38% |
|
International Equities or Shares |
90 |
27 |
73.25% |
12.21% |
-33.08% |
|
70 / 30 # |
109 |
8 |
38.72% |
10.38% |
-13.43% |
|
50 / 50 |
107 |
10 |
47.22% |
10.76% |
-21.59% |
|
30 / 70 |
99 |
18 |
56.33% |
11.23% |
-29.70% |
|
15 / 85 |
96 |
21 |
65.31% |
11.74% |
-36.49% |
|
5 / 95 |
91 |
26 |
71.08% |
12.27% |
-39.28% |
# - i.e.
70% cash & fixed interest assets, 30% growth assets
This data provides some interesting information which is useful in guiding the development of a client's optimal asset allocation. No surprises that the more growth assets you include in a portfolio, the greater the average return but also the greater the volatility. The key for helping to guide the determination of an appropriate asset allocation is to sit back and think how these returns would impact your situation and how comfortable you would feel to experience worst year scenarios.
Regards,
Scott Keefer
