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ASX/Russell Long-Term Investing Report 2006
The report, a collaboration between the Australian Securities Exchange and Russell Investment Group, investigates the performance of a range of investments over the past 10 and 20 years.
Now in its 10th year, the report found that Australian REITs (the internationally accepted name for LPTs) outperformed all other sectors, delivering the best after-tax returns at the lowest and highest marginal rates, for both the ten and twenty year periods. Similarly, global listed property outperformed other asset classes such as Australian residential investment property and fixed interest.
Australian shares outperformed overseas shares, with returns bolstered significantly by the favourable tax treatment of shares compared to property and cash.
Those at the lowest marginal tax rate have gained the most with after tax returns almost equal to pre-tax performance, thanks to the franking credits system used by investors to offset tax already paid on company profits against the tax on their dividends.
Taking gearing into account, returns from both Australian shares and residential property increased by around three percent per annum. However, shares outperformed residential investment over the last decade at both the lowest and highest marginal tax rates.
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