Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Register

21 May 2025

Home / 211

Clear winner and loser in 2017/2018 survey

Over 400 readers completed the short survey on expectations for market returns in this new financial year, and the results suggest optimism for overall share market performance.

Winner of the expected best-performer category

Unhedged international equities (46% of votes)

Equities received strong support, with unhedged global shares (46%), Australian small caps (22%) and Australian equities (15%) adding up to 83% of votes. There was little support for fixed interest, and with cash at only 4% of votes, few investors see a market rout.

Particularly notable is that international equities have come first in four of the previous five financial years, so there’s either little support for ‘reverting to the mean’, or people are extrapolating from recent performance. How much does the concentration in Australia’s market among banks, miners and retailers play a role?

Only 2% expect residential property to be the best, but as in all years, that’s where most of the investment dollars will go.

Winner (or loser) of the expected worst-performer category

Cash (33% of votes)

Expectations for the worst performer were somewhat more balanced, with cash and fixed interest adding up to 57% of nominations. Taking a look at the Morningstar numbers for each financial year since 1998, cash has only come bottom twice. There are usually one or two other asset classes that put in a bad year and underperform the defensive characteristics of cash. Last year, cash outperformed listed property and fixed interest.

A healthy 22% expect residential property to perform worst, which is a decent vote for the market finally losing its head of steam (in Sydney and Melbourne, at least).

Most nominated range for S&P/ASX200 Total Return Index

+5% to +10% (47% of votes)

A strong 87% of votes placed the Australian index in the range of 0% to 10%, with most above +5%. Given the US market is at all-time highs and Australian and global valuations look stretched, and with US rates rising, this is an optimistic note for steady performance. There was stronger support for +10% and better (7.5%) than a bad result of -10% or worse (only 3%).

We will report on the results of these predictions at the end of 2017/2018.

4 Comments
Kenneth Maurice Ellis
July 20, 2017

Why are so many wanting to reduce the profit of our banks when the vast majority of all superannuation funds hove some exposure to them. Is it a desire to have a lower value for our superannuation? or just that people like bitching?

Cheers, Ken Ellis

Kevin
July 22, 2017

Hiya Kenneth.

I think it is human nature to bitch,and accept that if everybody repeats something then it must be true, and great wisdom.

I keep annual reports.Looking at WBC and ANZ around 1991 when they were suffering, net interest margins were around the 4.5% mark.When they came back to profit most years the profit as a %age of assets is 1%.That is almost constant from 1991 until now.Net margins have fallen to around the 2% mark (less for NAB).Yet since then politicians,crowds,experts, all repeating the same thing, huge profits (where),how could it not be true.

CBA funds me so in 1996 if my memory is correct they almost had 100 billion in gross assets.Net profit of almost $1 billion.Net margins of around 3.8 or3. 9 %.They have been so constant in net profit,always 1% or 1.1% of gross assets.Net margins down to around 2.07%.

I would think shortly CBA will have gross assets of $1 trillion,which will produce net profit of $10 billion.No doubt politicians will have their crocodile tears,vote for me and I will do something about these huge profits.I wish they would explain how 1% is a huge profit margin after taxes and expenses

Andre Lavoipierre
July 20, 2017

Graham, You state that last year cash outperformed listed property and fixed interest. Also it appears that respondents to the survey have fixed interest as third worst performing asset class in 2017-18. I think your next survey should split fixed interest into fixed and floating because the floating rate securities have done very well over the past year eg Esltree Funds Management, who invest in listed convertible preference shares and subordinated notes (commonly known as hybrids) returned 13.7%...not a bad return considering _the volatility is only circa 22% of its comparable equities.

Paul
July 20, 2017

Graham, on your newsletter talking about ripping off existing customers, my bank offers walk in or “blow in” new customers 3% pa on their Maxi Savings account. Despite being a loyal customer over many years, they could only get me up to 2.7% after first stating that 2.55% was the rate for “high worth” existing customers. Bring on the Royal Commission!

 

Leave a Comment:

RELATED ARTICLES

The 60:40 portfolio ... if no longer appropriate, then what is?

Diversification is the foundation of a solid portfolio

Firstlinks is sponsored by:
banner

Most viewed in recent weeks

Pros and cons of Labor's home batteries scheme

Labor has announced a $2.3 billion Cheaper Home Batteries Program, aimed at slashing the cost of home batteries. The goal is to turbocharge battery uptake, though practical difficulties may prevent that happening.

Howard Marks: the investing game has changed

The famed investor says the rapid switch from globalisation to trade wars is the biggest upheaval in the investing environment since World War Two. And a new world requires a different investment approach.

Welcome to Firstlinks Edition 606 with weekend update

The boss of Australia’s fourth largest super fund by assets, UniSuper’s John Pearce, says Trump has declared an economic war and he’ll be reducing his US stock exposure over time. Should you follow suit?

  • 10 April 2025

4 ways to take advantage of the market turmoil

Every crisis throws up opportunities. Here are ideas to capitalise on this one, including ‘overbalancing’ your portfolio in stocks, buying heavily discounted LICs, and cherry picking bombed out sectors like oil and gas.

An enlightened dividend path

While many chase high yields, true investment power lies in companies that steadily grow dividends. This strategy, rooted in patience and discipline, quietly compounds wealth and anchors investors through market turbulence.

Tariffs are a smokescreen to Trump's real endgame

Behind market volatility and tariff threats lies a deeper strategy. Trump’s real goal isn’t trade reform but managing America's massive debts, preserving bond market confidence, and preparing for potential QE.

Latest Updates

Investment strategies

Getting rich vs staying rich

Strategies to get rich versus stay rich are markedly different. Here is a look at the five main ways to get rich, including through work, business, investing and luck, as well as those that preserve wealth.

Investment strategies

Does dividend investing make sense?

Dividend investing offers steady income and behavioral benefits, but its effectiveness depends on goals, market conditions, and fundamentals - especially in retirement, where it may limit full use of savings.

Economics

Tariffs are a smokescreen to Trump's real endgame

Behind market volatility and tariff threats lies a deeper strategy. Trump’s real goal isn’t trade reform but managing America's massive debts, preserving bond market confidence, and preparing for potential QE.

Strategy

Ageing in spurts

Fascinating initial studies suggest that while we age continuously in years, our bodies age, not at a uniform rate, but in spurts at around ages 44 and 60.

Interviews

Platinum's new international funds boss shifts gears

Portfolio Manager Ted Alexander outlines the changes that he's made to Platinum's International Fund portfolio since taking charge in March, while staying true to its contrarian, value-focused roots.

Investment strategies

Four ways to capitalise on a forgotten investing megatrend

The Trump administration has not killed the multi-decade investment opportunity in decarbonisation. These four industries in particular face a step-change in demand and could reward long-term investors.

Strategy

How the election polls got it so wrong

The recent federal election outcome has puzzled many, with Labor's significant win despite a modest primary vote share. Preference flows played a crucial role, highlighting the complexity of forecasting electoral results.

Sponsors

Alliances

Site Map

About Firstlinks

© 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.