Australian Shares, International Shares

Shares still best for investment returns

australian shares returns

Australian and international shares will continue to be the leading asset classes for returns in the next decade, even when factoring in inflation and volatility.

Australian and international shares will provide better returns than most other asset classes in the next 10 years and will only be exceeded by emerging market shares, according to an Australian investment consulting business.

Evergreen Consultants made the prediction as part of its 2021 Long Term Expected Returns Framework, which takes into account the impact of inflation across a range of asset classes and which found the key measures in projecting likely investment returns were higher inflation and volatility.

Evergreen Consultants founder and chief executive Angela Ashton said the framework projected inflation to reset moderately higher at 2.25 per cent over the medium to long term – 50 basis points higher than its previous forecast – accompanied by increased volatility.

Based on this, Evergreen stated it was forecasting 7.75 per cent average annual growth for Australian shares over the long term, with annualised volatility of 13.5 per cent.

At the same time, the firm was forecasting an 8.05 per cent average annual return for global shares, with annualised volatility of 14 per cent, and 8.65 per cent a year for Australian small company shares, with annualised volatility of 17 per cent.

Ashton said the only prospect for higher returns was emerging markets, which Evergreen expected to return 9.05 per cent a year over the long term, but with higher annualised volatility of 17.5 per cent.

Real estate investment trusts (REIT) will underperform shares, but have less expected volatility, according to Evergreen, which stated the outlook for Australian REITs was an average return of 6.4 per cent a year, with annualised volatility of 13 per cent.

In contrast, global REITs are forecast to return 6.55 per cent a year, with annualised volatility of 12.5 per cent.


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