Investor returns defy volatility

Brian Thomas

The recent market volatility generated by the sub-prime meltdown has not been all bad, with investors actually making money during the period, according to the Perennial Investors Index.

The index analysis said that despite the Australian share market and the Australian dollar free falling at different stages during August, the typical conservative, growth and high growth investor actually made money on their investments — but not quite enough to earn back the negative returns of June and July.

However, Perennial’s head of retail funds management Brian Thomas warned of further volatility on the horizon.

“It feels like there is more volatility to come, particularly given the strength of the bounce-back, with Australian shares experiencing their biggest weekly rise in 32 years on 24 August and the markets pricing up a ‘Fed to the rescue’ approach,” he said.

“Beyond this, we believe that solid corporate earnings will help produce solid returns for investors,” Thomas said.

He said Perennial saw global real estate investment trusts as being good value in circumstances where they had been sold down more than equities on interest rate woes, despite the fact that office, retail shopping and commercial property fundamentals remain extremely robust.