Russell report 2004 - Summary

Russell Investment Group - ASX Investment Performance Report

The ASX Investment Performance Report by Russell Investment Group found that, for the 10 years ended 31 December 2004, listed property has outperformed all other investment sectors.

The results of the latest survey, revealed that listed property provided after-tax returns of between 12.3% and 10% per annum (depending on income bracket); while Australian shares returned between 11.6% and 9.2% per annum over the same period.  

Listed property has provided a good safe haven for the past couple of years however fundamentally they have proved very attractive because of their stable income profile. Both these characteristics have contributed to the sectors strong performance in the recent survey. 

The ASX Investment Performance Report measures the pre and post tax returns on shares, listed property, residential investment property, fixed interest and cash over 10 years from 1 January 1995 to 31 December 2004.

Key highlights – Investment returns for 10 years to December 2005:

For the top marginal tax

Australian Shares – 9.2% pa
Listed Property – 10.0% pa
Residential Investment property – 8.4% pa
Fixed interest 4.4% pa

For the lowest marginal tax rate:

Australian Shares – 11.6% pa
Listed Property – 12.3% pa
Residential Investment property – 10.6% pa
Fixed interest 6.7% pa

Over 20 years, depending on marginal tax brackets, Australian shares produced the best returns ranging between 13.5% and 11.6% per annum followed by residential investment property with returns between 11.7% and 10.2% per annum and listed property 11.5% and 9.5% per annum.

Fixed interest enjoyed more modest performance, returning between 8.5% and 5.4% per annum depending on the marginal tax rate applied. Cash returned 6% on the lowest marginal tax rate and 3.7% on the highest marginal tax rate including the Medicare levy.

On the results Colin Scully, Deputy Chief Executive Officer said: “This report is a useful tool for all participants in Australian capital markets.  We understand it to be the only one of its kind and we are pleased to partner with an organisation such as the Russell Group, to make this available for market participants.  Of course, all markets are prone to volatility, but this report illustrates that diversification and perseverance are necessary for riding out the inevitable rises and falls of all markets.”

The report from Russell Investment says; “Real returns have been particularly strong for listed property, Australian shares and residential property over this period”. Additionally, Russell Investment point to recent changes to NSW property taxation, but do not expect to see the impact of these changes until the 2005 report. Russell Investment also analysed the return of different investments over a 20-year period, from 1 January 1985 to 31 December 2004. Shares, residential investment property, listed property and fixed interest all produced after-tax returns well in excess of the average rate of inflation, which was 4% over this period.

The ASX Investment Performance Report was funded by the ASX Research Committee, which undertakes research for the benefit of the securities industry.

Download a full copy of the report (PDF 67KB)