End of year surge for listed property

Asset classes encountered another topsy turvy month in the last month of 2000 with poor results in equity markets juxtaposed against a soaring listed property trust class.

Listed property trusts, which usually follow the course of Australian equities, leapt 5 per cent in contrast to Australian equities, which fell 2 per cent in December, according to figures released by Ausbil Dexia.

International equities performed even worse, losing almost 4 per cent. This was despite a positive result from the Dow (3.6 per cent) and the S & P (0.4 per cent), with the overall poor performances of the Nasdaq (down 5 per cent) and a malaise in the Asian markets (excepting Hong Kong) dragging International equities into the red.

According to Ausbil Dexia, listed property trusts were kept afloat on the back of low bond rates. Ausbil speculated that listed property acted as a shelter against the flak from the volatile equity markets.

Ausbil chief investment officer Michael Wilson says that despite the overall loss of 0.7 per cent in December for average balanced superannuation funds, the outlook for the year should see equities perform in a positive manner, due to the recently announced interest rate cuts in the US.

"History shows that rate cuts are worth between 5 and 10 per cent in added value to equities markets. The bounce in markets immediately following announcement of the rate cut is a positive trend that is likely to continue," he says.

However, Wilson says superannuation, which acts as a gauge of the overall performance of asset classes, is forecast to achieve an end of financial year return of 5 per cent, well down on the 1999/2000 figure of 13 per cent.