The first forecast for the coming year has been bandied about in the press. The source of the figures is AMP's ecomonist Dr Shane Oliver.
The key forecast returns for 2008 are:
- 9% for international shares (both hedged and unhedged)
- 12% for Australian shares
- 8% for global listed property
- 8% for Australian listed property
- 7% for cash
We don't believe in trying to forecast returns - there is little evidence that this can be done successfully over the short term.
An interesting aspect of the article was the existence of data for the 2006 and 2007 years (to the end of November.) I have put the data in the table below, sorting the data in order of return. The interesting point to note is how random performance is. Global listed property was the best asset class in 2006 and the worse in 2007. Australina shares went from third to 1st and Australian Listed Property went from second to third. This randomness is a strong argument for diversification - just exposure yourself to a multi asset class portfolio and you will reduce the volatility of your portfolio, and benefit from each year's winners.
| 2006 Returns (% return including dividends) |
|
2007 to end Nov. Returns (% return including dividends) |
| Global Listed Property |
39.3 |
|
Australian Shares |
19.3 |
| Australian Listed Property |
34 |
|
International Shares - Hedged |
5.2 |
| Australian Shares |
24.2 |
|
Australian Listed Property |
-1.8 |
| International Shares - Hedged |
15.4 |
|
International Shares - Unhedged |
-2.1 |
| International Shares - Unhedged |
11.5 |
|
Global Listed Property |
-11.9 |
Regards,
Scott Francis
