Aggregate earnings for ASX-listed companies have gone precisely nowhere since the end of 2006, on a per share basis. It’s no surprise, then, that the Aussie sharemarket hasn’t managed to make any progress over that period either.
But there are a couple of points to note before you throw your hands up in the air in disgust. For one, we are measuring from a high point. Measure the performance since the March low and you get a much perkier picture.
Second, in total return terms (which includes reinvested dividends and is calculated by Bloomberg), you’ve made $57 on your initial $100 by being in the index. Over 10 years, that implies an annual compound rate of return of about 4.5 per cent, which isn’t awful when you consider there was an almighty slump in 2008.
But it ain’t great, either. Assuming inflation of around 2.5 per cent over that time, and the real rate of return looks more like 2 per cent. Add in fees and taxes and, uh-oh, you are starting to look closer to 1 per cent, in real terms.
Took the words right out my mouth, six years late, but hey.
If the above fine idea interests you then consider the MacroBusiness Fund.
During September the mix of the falling Australian dollar and increasing international equities saw all of our portfolios again outperform their benchmarks except the income portfolio. The international portfolio was the standout, up 4% for the month.
Our overweight to international equities in our Asset Allocation portfolios helped to offset weakness in Australian equities and bonds in our tactical portfolios – more so in the Growth portfolio (which is more aggressively positioned) than the other tactical portfolios:
The information on this blog contains general information and does not take into account your personal objectives, financial situation or needs. Past performance is not an indication of future performance.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
