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 ultimate superannuation EOFY checklist 2026

Here is a checklist of 28 important issues you should address before June 30 to ensure your SMSF or other super fund is in order and that you are making the most of the strategies available.

Noel Whittaker’s take on the budget

Marketed as a fix for inequality and housing affordability, the latest budget instead delivers a tangle of tax changes that leave everyday Australians worse off.

Australia has no death duties. Technically.

Australia may not levy formal death duties, but a growing web of tax measures is quietly shaping what wealth passes between generations. Now, the 2026 budget adds another layer.

Lithium's rally is real this time – but no-one trusts it

The lithium rally mirrors the early-2010s tech stock surge, with demand set to double by 2030. Supply has been slow to respond, creating a market deficit for future tech like humanoid robotics and solid-state batteries.

Welcome to Firstlinks Edition 662 with weekend update

The debate over the budget is increasingly shaped by frustration and perceptions of unfairness, rather than clear-eyed assessment of policy outcomes.

Two months into retirement

A retirement researcher's take on retirement and her focus on each of her six resource buckets to stay engaged during the transition and beyond.

Latest Updates

Are the government’s CGT changes better for young investors?

New CGT rules promise fairness, but could young investors lose out? A practical scenario reveals how changes impact deposit goals, investment choices, and long-term wealth building for the next generation.

Retirement

How to minimise tax with a will

Inheritance tax implications in Australia may surprise some, as poor estate planning without proper wills or trusts can lead to costly tax bills and delays for beneficiaries.

Investment strategies

AI can’t pick winning funds, but it can help you avoid losers

Machine learning has been touted a game changer investment management. But a new study overturns claims that AI can generate positive alpha in mutual funds. Here are some practical takeaways for investors.

Investment strategies

Inflation BIG picture: Boomers got lucky, next Gen not so much

A 150-year view shows inflation's upward bias, driven by shifting monetary regimes and war stocks. This marks an end to the low-inflation boom that enriched boomers and ushers in a higher-inflation era for younger investors.

Planning

Tax deductibility of financial advice improves affordability

A shrinking adviser workforce and rising costs are squeezing access to financial advice, just as demand surges. Expanded tax deductibility offers a modest but meaningful boost to affordability.

Retirement

Retirement in reality – 3 months in

A reflection on travel mishaps, smart decision-making, time pressures and rebuilding health habits. Three months in, here's how to navigate the surprising realities of life after work.

Taxation

Calculating the business cost of Australia’s new 'productivity tax'

Amid a national productivity crisis, new economic analysis finds the tax changes in the 2026 Federal Budget create Australia’s first-ever by design 'Productivity Tax', where young people will pay the biggest price.

Sponsors

Alliances

© 2026 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.