Over the last 30 years the Australian share market has provided investors with an average total return of ~9.5% per annum. This is roughly in line with what the U.S. share market has achieved historically.
It is worth remembering that this is the average, which means some shares outperformed and others underperformed.
This also means that the more shares you have in your portfolio that outperform, the better your chances of beating the market.
But which shares could beat the market in the future? While picking outperformers over three decades is probably impossible, I think a decade is possible.
Three ASX shares that I think have the potential to be market beaters throughout the 2020s are listed below. Here's why I rate them highly:
Appen Ltd (ASX: APX)
The first future market beater could be Appen. It is a leading developer of high-quality, human annotated datasets for machine learning and artificial intelligence models. It provides its services to many of the world's biggest tech giants including Facebook and Microsoft. I believe this is a testament to the quality of its offering. And with demand for these services expected to continue to grow at a strong rate due to the increasing importance of artificial intelligence, I believe the future is very bright for Appen.
NEXTDC Ltd (ASX: NXT)
Another ASX share which I think could beat the market over the long term is NEXTDC. It is a data centre operator with a portfolio of world class centres in key locations across Australia. The company has been experiencing significant and growing demand for its services over the last couple of years. This has been driven by the shift to the cloud and the ever-increasing amount of data being generated by consumers and businesses. I expect more of the same over the next decade as the shift to the cloud accelerates.
ResMed Inc. (ASX: RMD)
Finally, I think this sleep treatment-focused medical device company's shares could beat the market during the 2020s. This is thanks to ResMed's market-leading products and massive market opportunity. Management estimates that only ~20% of sleep apnoea sufferers have been diagnosed. Given the growing awareness of the sleep disorder, I believe more diagnoses to be made in the coming years. I expect this to underpin strong earnings growth for the foreseeable future.
