- Resize text
- Print this page
August 2, 2012
Flight to certainty proving costly for investors, Russell analysis shows
- Latest risk vs return analysis shows performance across variety of asset classes for financial year end
SYDNEY, 2 August, 2012 – Investors are craving certainty in today’s volatile markets, but perceived safe options like cash are setting up longer term funding problems, global multi-asset manager Russell Investments said today on release of its latest risk versus return analysis.
The Risk vs Return 2012 end of financial year edition compares returns for assets including cash, shares, bonds and property, over the last 30 years. It looks at how $1000 invested in 1980 would have performed if it were invested in different portfolios.
For the first six months of 2012, all asset classes delivered positive returns, despite the very bumpy ‘risk-on risk off’ experience. However over the longer term, Australian shares was the top performing asset class for the period 1 Jan 1980 to 30 June 2012, followed closely by the diversified (70% growth) portfolio, international bonds then international shares (unhedged). All asset classes beat cash and inflation over the longer term.
“The main take away from this analysis is that while investors are looking for certainty in the current environment, certainty is expensive. In the short term, cash may provide a sense of security when asset markets fall, but from a longer term retirement funding perspective it is an extremely high-risk asset as it lags all other investment options and leads to shortfalls,” said Scott Fletcher, Director of Client Investment Strategies at Russell Investments.
The analysis shows the highest and lowest returning asset class changes significantly year on year, reinforcing the notion that investors should stick to a medium to long term investment horizon if they want to avoid volatility.
“One way to increase the degree of certainty in outcomes in a cost-effective way is to diversify and increase your investment horizon wherever possible. The key is to appropriately diversify across asset classes, investment styles, regions and managers and give growth assets enough time to realise their full value and growth potential. This is a proven way to pass the “can you sleep at night?” test.
By investing in an actively managed, globally diversified multi-asset portfolio with a longer term time horizon, investors can achieve a better balance in managing the risk of underfunding retirement plans, while having a robust engine for long term wealth creation that accounts for the year to year fluctuations in asset class returns.
A full copy of the Russell Risk vs Return 2012 end of financial year edition can be accessed here. To speak to Russell about this analysis, please contact Honner Media.
About Russell Investments
Russell Investments (Russell) is a global asset manager and one of only a few firms that offers actively managed, multi-asset portfolios and services that include advice, investments and implementation. Working with institutional investors, financial advisors and individuals, Russell’s core capabilities extend across capital markets insights, manager research, Indexes, portfolio implementation and portfolio construction.
Russell has approximately $155 billion in assets under management (as of 30/6/2012) and works with 2,400 institutional clients, more than 580 independent distribution partners and advisors, and individual investors globally. As a consultant to some of the largest pools of capital in the world, Russell has $2.4 trillion in assets under advisement (as of 31/12/11). It has four decades of experience researching and selecting investment managers and meets annually with more than 2,200 managers around the world. Russell traded more than $1.5 trillion in 2011 through its implementation services business. Russell calculates more than 80,000 benchmarks daily covering 98 percent of the investable market globally, 85 countries and more than 10,000 securities. Approximately $3.9 trillion in assets are benchmarked to the Russell Indexes.
Headquartered in Seattle, Washington, USA, Russell has offices in around the world including Amsterdam, Auckland, Beijing, Chicago, Dubai, Frankfurt, Johannesburg, London, Melbourne, Milan, New York, Paris, San Francisco, Seoul, Singapore, Sydney, Tokyo and Toronto. For more information about how Russell helps to improve financial security for people, visit www.russell.com/au or follow us @RussellInvestAU
Issued by Russell Investment Management Ltd ABN 53 068 338 974, AFS Licence 247185 ("RIM"). This document provides general information only and has not been prepared having regard to your objectives, financial situation or needs. Before making an investment decision, you need to consider whether this information is appropriate to your objectives, financial situation and needs. This information has been compiled from sources considered to be reliable, but is not guaranteed. Past performance is not a reliable indicator of future performance. Any potential investor should consider the latest Product Disclosure Statement ("PDS") in deciding whether to acquire, or to continue to hold, an investment in any Russell product. The PDS can be obtained by visiting www.russell.com/au or by phoning
(02) 9229 5111. RIM is part of Russell Investments ("Russell"). Russell or its associates, officers or employees may have interests in the financial products referred to in this information by acting in various roles including broker or adviser, and may receive fees, brokerage or commissions for acting in these capacities. In addition, Russell or its associates, officers or employees may buy or sell the financial products as principal or agent.
Copyright 2012 Russell Investments. All rights reserved.