Double digit returns a thing of the past
Investors will have to learn to live with single digit asset returns over the medium-term as the credit crunch persists, according to Portfolio Partners’ head of equities Glenn Hart.
He said that “while the credit crunch has gone off the front pages for now, we think it will be a longer term issue that will see much reduced credit available globally, including Australia”.
“This means that the rate of asset growth will be much lower than we have experienced in (the Australian equities) market in the past five years.”
Investors should “expect 8 to 10 per cent over the medium term, with a lot more volatility”, he said. “If you’re expecting 20 per cent plus anytime soon you’re going to be disappointed.
“Essentially, we’re coming back to a period where there are much more normal returns across the broad range of assets, and you’ll be struggling to get double digit returns on a multi-year basis.
“There has been so much over-borrowing that has to be retired and it’s pushed asset prices up so much that as the borrowing gets retired, asset prices will just have to naturally find their own level,” he said.
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