Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn
About

News

Top performing asset classes for 2019/20

Emma Rapaport  |  10 Jul 2020Text size  Decrease  Increase  |  
Email to Friend

It's fascinating to reflect on year that was in financial markets and see which asset classes came out top. It's also a timely reminder that trying to forecast which asset class will outperform is a fraught endeavour.

It's been a year to remember. By the end of 2019 we'd witnessed interest-rate cuts, weakening consumer confidence, and the persisting US-China trade war. Miraculously, the S&P/ASX 200 TR Index rose 23.4 per cent.

"The market was driven by a tsunami of investor money, which was either relentlessly seeking yield or grasping for growth at any price," Morningstar senior analyst Ross MacMillan says.

"Momentum was one of the key factors fuelling the market's outperformance, particularly among the medium- to large-cap stocks."

Come January 2020, it appeared we were in for a repeat of 2019, with the market operating under similar economic conditions. But then the coronavirus hit.

"On 20 February 2020, the S&P/ASX 200 Index reached an all-time (intra-day) high of 7,199," he says.

"Just six weeks later, the market was down around 30 per cent."

Real assets (property and infrastructure) experienced heavy losses, as did companies tied to the oil sector.

The first quarter of 2020 will be remembered for the unprecedented sell-off in response to the COVID-19 global pandemic, and the second for the stunning rebound, particularly among global tech and healthcare stocks.

Asset Class Investment Growth

Growth of $1 from July 1989 to June 2020

investment growth fy20

Source: Morningstar

The Morningstar Asset Class Gameboard for financial year 2019/2020 shows the order from best to worst was:

  • International Fixed Interest (Hedged): 5.2 per cent
  • International Equity: 5.2 per cent
  • Australian Fixed Interest: 4.2 per cent
  • Cash: 0.7 per cent
  • Small Caps: -5.7 per cent
  • Australian Equity: -7.7 per cent
  • Australian Listed Property: -20.7 per cent

Annual Asset Class Returns – Financial Year 

This chart shows the performance of seven major asset classes over the last 20 years. Each colour represents a different asset class, ranked by its performance.

Picking the best performing asset class year after year is near impossible. For example, last year, Australian Listed Property was the best performing asset class, delivering returns of 19.4 per cent. This year, it's the worst. 

Asset Class Gameboard

(Click to enlarge)

Source: Morningstar. Cash - RBA Bank accepted Bills 90 Days; Aust. Fixed Interest - Bloomberg Ausbond Composite 0+ Yr TR AUD; Intl. Fixed Interest (H) - BBgBarc Global Aggregate TR Hdg AUD; A-REITs - S&P/ASX 300 A-REIT TR; Global REITs (H) - FTSE EPRA Nareit Dv REITS TR Hdg AUD; Aust. Equity - S&P/ASX 200 TR; Small Caps - S&P/ASX Small Ordinaries TR; Intl. Equity - MSCI World Ex Australia NR AUD

Want to dig deeper? Check out Morningstar's latest Market Index Performance report | June 2020. This is our monthly update detailing the short- and long-term performance of major indices.

 

is an editor for Morningstar.com.au

© 2020 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

Email To Friend