Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 276

Financial assets performance over time

Advertisements for superannuation funds usually come with an obligation to add “past performance is not a reliable guide to future returns”. This is certainly true on a year by year basis, where the pecking order of classes of assets and fund managers have some volatility. Indeed, when it comes to asset classes, it is rare for the same class to top the ladder year after year.

The volatility of Australian shares over the past 150 years is evident in the chart below.

Indeed, the amplitudes of rises and falls is alarming. Of compensating solace is the fact that the All Ordinaries Accumulation Index continues to climb, and the combination of dividends and capital gain has been rewarding to long-term investors for a long time.

So, what are our investment choices?

The main asset classes are:

  • Shares (local & international)
  • Property (real and trusts)
  • Bonds
  • Cash
  • Precious metals (gold, silver, gemstones etc.)
  • Collectables (art, stamps, vintage cars etc.)

How have these performed over time? The following charts show the returns over 20 and 10 years.

While riskier assets (shares) should always yield better returns than more passive (or defensive) assets (bonds, property, collectibles and precious metals), they don’t necessarily do so. Global shares in the 20 years since 1998 were impacted by the dot-com bubble and meltdown in 2000, and the GFC in 2008. Less so Australian shares, which missed out on both crashes. Gold did much better than usual, being a panic metal these days but a perceived safe-house over this period.

There was a different story over the past 10 years as we see below.

Global shares did best, with Australian shares in third place, sandwiching listed property which has done well over both time periods. Gold resumed its normally low position, along with investment housing which consistently performs badly over long periods.

However, when we take a short period – say 5 years, as shown in the last exhibit – and combine that with some extraordinary developments, some surprises emerge.

Alarm bells are ringing

Firstly, global shares have done extraordinarily well in an environment of record-low interest rates. But with P/E ratios nudging 20:1 (with a small reversal last week, but longer term, compare to a safer 14:1) across the world, alarm bells are ringing for returns over the next five years. Ditto investment dwelling prices and returns in Australia, where bubble prices in Sydney have been experienced, accompanied by one of the highest mortgage debt to GDP ratios in the world.

All that said, it seems shares and listed property classes are the consistent best performers over long periods. Perhaps online shopping could dent listed property returns in the future.

However, if shares, as the riskiest active-class investment of the lot, don’t stay at or close to the top, it's because the economy is in bad shape via:

  • a depression
  • an asset crash from excessive exuberance, or
  • underperforming businesses.

Fund managers and SMSFs usually choose to be conservative by having around half their funds in active (riskier) assets while taking out insurance via other assets and cash. Just in case.

 

Phil Ruthven AM is Founder of IBISWorld and is recognised as one of Australia’s foremost business strategists and futurists. This article is general information and does not consider the circumstances of any investor.

  •   17 October 2018
  • 2
  •      
  •   

RELATED ARTICLES

Diversification is not a free lunch

How to invest in funds for free (almost)

Best and worst performing equity funds of 2020

banner

Most viewed in recent weeks

The growing debt burden of retiring Australians

More Australians are retiring with larger mortgages and less super. This paper explores how unlocking housing wealth can help ease the nation’s growing retirement cashflow crunch.

Four best-ever charts for every adviser and investor

In any year since 1875, if you'd invested in the ASX, turned away and come back eight years later, your average return would be 120% with no negative periods. It's just one of the must-have stats that all investors should know.

LICs vs ETFs – which perform best?

With investor sentiment shifting and ETFs surging ahead, we pit Australia’s biggest LICs against their ETF rivals to see which delivers better returns over the short and long term. The results are revealing.

Family trusts: Are they still worth it?

Family trusts remain a core structure for wealth management, but rising ATO scrutiny and complex compliance raise questions about their ongoing value. Are the benefits still worth the administrative burden?

13 ways to save money on your tax - legally

Thoughtful tax planning is a cornerstone of successful investing. This highlights 13 legal ways that you can reduce tax, preserve capital, and enhance long-term wealth across super, property, and shares.

Warren Buffett's final lesson

I’ve long seen Buffett as a flawed genius: a great investor though a man with shortcomings. With his final letter to Berkshire shareholders, I reflect on how my views of Buffett have changed and the legacy he leaves.

Latest Updates

Retirement

Why it’s time to ditch the retirement journey

Retirement isn’t a clean financial arc. Income shocks, health costs and family pressures hit at random, exposing the limits of age-based planning and the myth of a predictable “retirement journey".

Financial planning

How much does it really cost to raise a child?

With fertility rates at a record low, many say young people aren’t having kids because they’re too expensive. Turns out, it’s not that simple and there are likely other factors at play.

Exchange traded products

Passive ETF investors may be in for a rude shock

Passive ETFs have become wildly popular just as markets, especially the US, reach extreme valuations. For long-term investors, these ETFs make sense, though if you're investing in them to chase performance, look out below.

Shares

Bank reporting season scorecard November 2025

The Big Four banks shrugged off doomsayers with their recent results, posting low loan losses, solid margins, and rising dividends. It underscores their resilience, but lofty valuations mean it’s time to be selective. 

Investment strategies

The real winners from the AI rush

AI is booming, but like the 19th-century gold rush, the real profits may go to those supplying the tools and energy, not the companies at the centre of the rush.

Economy

Why economic forecasts are rarely right (but we still need them)

Economic experts, including the RBA, get plenty of forecasts wrong, but that doesn't make such forecasts worthless. The key isn't to predict perfectly – it's to understand the range of possibilities and plan accordingly.

Strategy

13 reflections on wealth and philanthropy

Wealth keeps growing, yet few ask “how much is enough?” or what their kids truly need. After 23 years in philanthropy, I’ve seen how unexamined wealth can limit impact, and why Australia needs a stronger giving culture.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.