Australian shares beat listed property

Australian shares have outperformed listed property and residential property as the investment providing the best ‘real’ returns over the past two decades, according to results released today from the Russell/ASX Long-Term Investing Report.

The annual Report, commissioned by the Australian Securities Exchange (ASX) and prepared by Russell Investment Group’s investment strategy team, examines the performance of different types of investments over 10 and 20 year periods ending at the end of last year.

The report found that Australian shares outperformed all other sectors, delivering the best after-tax and after-cost returns at the lowest and highest marginal tax rates and also at the superannuation rate.

A summary of the report also said that leverage has increased the after-tax return of both shares and residential investment property.

“The increase in performance of these two asset classes has more than offset the borrowing costs over the ten year period” it said.

Russell Investment Group director of investment strategy Andrew Lill said “The good news for long-term investors is that, on average, the asset classes that experience greater volatility over the short-term also provide higher returns in the long run”.

“In times of market uncertainty, it is imperative for investors to have a diversified strategy” he added.

“Given the volatility the market has experienced this year, it is useful to pause and reflect on those longer-term benefits and the performance advantages of listed investments over other investment opportunities” ASX general manager Peter van Steensel said.

The report also found that superannuation remains one of the most tax effective environments to invest in.