Performance chasers suffer, again

The huge number of investors who turned to international share funds last year will be licking their wounds when they are informed of performance numbers for the past financial year.

International shares was the only asset class to fall into negative territory for the past year, losing 6 per cent for the year to June 30, after another dismal month in June where it lost 3.5 per cent. Nearly all overseas markets fell hard over the past year. The Nasdaq lost 45 per cent, the S&P 500 lost 16 per cent, while France lost 19 per cent, Germany 10 per cent and the UK 10 per cent.

The nosedive for international shares coincided with the biggest move to the asset class in Australia’s financial history. Between July and September last year, international shares were by far the most popular individual asset class for retail investors. Assirt market share figures reveal that $1.9 billion fed into international shares for the three months, more than double the amount invested in Australian shares.

Ironically, the Australian equities market shone brightly in the past financial year, putting on 9.1 per cent last financial year, after posting strong gains in June. The traditional defensive play in volatile markets, listed property trusts, was the star performer for the year, putting on 13.5 per cent. Listed property trusts finished the year on a high note, rising 4.5 per cent in June, marginally ahead of Australian equities which returned 3.8 per cent for the month.

Ausbil Dexia chief investment officer Michael Wilson forecasts another good year for Australian equities and listed property this financial year. Ausbil Dexia’s initial forecasts for the year predict a 9 per cent increase for Australian equities, a 9 per cent increase for listed property and a comparitively dismal showing for international shares (2 per cent).