Double digit returns for a decade
Paul Taylor
Australian equities are likely to deliver nominal real returns of around 12 per cent over the next 10 years, according to Fidelity International’s head of Australian equities Paul Taylor.
In a presentation at the Portfolio Construction conference in Sydney yesterday, Taylor drew attendees’ attention to a London Business School study that highlighted Australia’s continued strong economic growth over the past 160 years. In his view, the key drivers of this growth will continue to boost the economy for at least the next 10 years.
“Australian shares have performed very well over the long-term and spectacularly over the past three years. They’ve delivered real returns of about 12 per cent per annum on average, which puts Australia at the top-end in world standards.”
Taylor said the five key drivers of Australia’s strong economic growth have included population growth (fuelled by immigration), abundant natural resources (particularly in relation to mining), good corporate governance, a range of sound companies to invest in and a tax regime that encourages the payment of high dividends.
“Australia has had one of the strongest corporate governance systems in the world for a long time now, which has given people the confidence to invest.
“Similarly, there have been sound companies to invest in and an almost perfect correlation between equity returns and dividends over the long term. Australian dividends are around 7.4 per cent, which puts them at the top-end of the world scale.”
Taylor said the key drivers of the economy over the past 160 years are still relevant today and should form the basis of predictions for future performance.
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