Did your property grow more than your share portfolio in FY2016?

Credit: stratman

According to research provided by CommSec, over the course of the 2016 financial year (FY) the average return from owning a dwelling was a rise of 13.9%.

In contrast, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) ended the 12 months down 4.1%, marking its first decline in four years.

So, for many Australian share market investors who also own property (such as their home), on average, it’s likely they made more money (on paper at least) from their property holding than from their share portfolio!

It’s worth noting that you didn’t have to own property directly to outperform the share market index with strong returns recorded by certain listed property stocks.

For example, Westfield Corp Ltd (ASX: WFD) increased around 15%, Stockland Corporation Ltd (ASX: SGP) increased approximately 13%, and Goodman Group (ASX: GMG) increased about 12% over the past year.

While an analysis of what did well in the recent past is of course interesting, what did poorly can be even more insightful for generating investing ideas.

CommSec’s research also noted that the Commodity Research Bureau index of commodities dropped by 15% over the year to 30 June 2016. Key falls were iron ore, thermal coal, crude oil and beef which fell 9%, 6%, 19% and 11% respectively.

Personally, I would be hesitant to try and pick the bottom of the iron ore and coal markets specifically. However, there are arguably opportunities worth considering…

For example, BHP Billiton Limited (ASX: BHP) operates a diversified resource business. While picking a turnaround in any single commodity is difficult, buying BHP’s exposure to a spread of commodities that are all trading at multi-year lows suggests medium term upside potential could be a real possibility.

Meanwhile, oil is one commodity which is perhaps (but perhaps not) easier to understand the supply and demand dynamics of, compared with most other commodities. Woodside Petroleum Limited (ASX: WPL) is Australia’s leading energy producer and its 20% plus share price fall over the last year makes it a stock that could be worthy of closer attention.

Finally, with beef down, Australian Agricultural Company Ltd (ASX: AAC) could be worth a look. However it should be noted that the shares did enjoy gains of around 40% in FY 2015.


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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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