Retail investors suffer
Retail investors are the main investor group suffering, with major growth assets falling rapidly over the last three months, according to Perennial’s Investor index.
The results of the index revealed that the typical growth investor experienced a negative return of almost -6 per cent over the last 12 months to January 2008.
Perennial Investment Partners head of retail funds management Brian Thomas said that while January had been the worst month in 20 years on the Australian share market, investors have still had exceptional returns over the last four years, with returns of 22 per cent in 2005, 25 per cent in 2006 and 16 per cent in 2007.
“The bounce back after the huge fall on January 22 is a good example of how it is usually best to stay calm during such dramatic sell offs. Our research shows that over the last 19 years you only had to miss the best 27 days in the share market to reduce your return to that of a cash return,” Thomas said.
Thomas said that the main concern for investors at the moment was determining whether January’s dramatic correction could provide hope for reasonable returns ahead or was the start of a prolonged bear market with low returns.
“Our view is that with our strong economy and an aggressive Federal Reserve, reasonable returns are likely from here to the end of the year, with extremely volatile swings particularly in the first half of the year,” he said.
According to Thomas, given the strength of the Australian economy and world growth still looking positive for the year, now may be an ideal time to invest in “quality growth assets”.
Recommended for you
Insignia Financial has reached a major milestone in completing the separation of MLC Wealth from NAB, having acquired the firm back in 2021.
There could be changes ahead for how ASIC requires licensees to handle conflicts of interest as the corporate regulator announces it will be meeting key stakeholders next year to update guidance.
Proper recordkeeping has been described as the “mortar between the bricks” of the advice process and critical to an FSCP decision as an adviser is suspended for failures in this area.
As investors increasingly seek to embed ESG considerations in their portfolios, a specialist adviser has offered tips for financial planners who may feel overwhelmed in tackling these complex topics with clients.
