With so much data around about the performance of the Australian share market, we thought it best to put the salient facts and figures all together in one place.
Here at the Motley Fool, we’re big fans of the share market.
We’ll let the facts do the talking.
The Facts: The Share Market
Fact #1: Internet bubble and global financial crisis (GFC) included, according to 2010 research by Credit Suisse, Australia has had the best performing share market in the world from 1900 to 2009.
Australia posted 7.5% after-inflation returns per year during that time, making those returns the highest (with volatility the second lowest) of the 19 major markets the researchers studied.
Fact #2: In the 2010 Russell Investments/ASX Long-Term Investing Report, up until the end of 2009, Australian shares outperformed all other investment sectors delivering the best after-tax and after-cost returns at the lowest and highest marginal tax rates across the last 20-year period, with an annual return of 9.9% and 7.8% respectively.
Fact #3: According to this volatility chart from Vanguard Investments, from 1980 to 2010, $10,000 would be worth…
* $234,319 in Australian shares, a return of 11.1% per annum.
* $145,040 in cash, a return of 9.3% per annum
* $36,383 in the Consumer Price Index (CPI), a return of 4.4% per annum.
Fact #4: According to Australian boutique investment firm Perennial Investment Partners++, over the 30 year period to 31 December 2009:
* Australian shares were the strongest performers, providing an annualised return of 12.7% p.a. (or a real return, after allowing for inflation, of 8.2% p.a.)
* International shares and property provided an annualised return of approximately 10.4% p.a. (or a real return of 5.9% p.a.), around 2.3% p.a. less than Australian shares;
* Fixed interest securities provided an annualised return of approximately 9.8% p.a. (or a real return of 5.3% p.a.), around 2.9% p.a. less than Australian shares; and
* Cash provided an annualised return of approximately 7.6% p.a. (or a real return of 3.1% p.a.), around 5.1% p.a. less than Australian shares.
++ It should be noted, Perennial Investment Partners took the 2009 top award as Morningstar’s Australian Fund Manager of the Year. As at September 2010, since inception in March 2000, their Perennial Value Australian Shares Trust had a gross return of 12.8% per annum versus 8.0% for the benchmark S&P/ASX 300 Accumulation Index. Not all funds are underperformers!
Summary: Although the various numbers, time periods and methodologies somewhat differ, the results are very similar…
Over the past 30 odd years, Australian shares have returned around 11% per annum.
Obviously past performance is obviously no guarantee of future performance, and that goes for the share market, interest rates, house prices and Melbourne Cup winners, Makybe Diva aside. But it’s all we’ve got, and we like the look of the numbers.
The share market may or may not gain 11% per annum for the next 30 years. We’re almost certainly going to have years where the market falls, even crashes.
But it has a long and indisputable history of steadily and inexorably rising, through recessions, wars, inflationary times and terrorist events.
History doesn’t lie, we think there’s a more than decent chance the share market will continue to out-perform just about all other investment classes in the next 30 years and more.
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