Global asset manager, Russell Investments has released its 2013 risk versus return analysis, showing a very strong recovery of growth assets over 2012.
The risk vs. return analysis is developed annually as a practical reference tool for advisers and investors, charting the annual returns of different asset classes over the last three decades. The analysis demonstrates how the returns of various asset classes differ significantly year to year and over the long-term.
While A-REITs achieved an impressive 32.8% return in 2012, making up for losses in previous years, the long term perspective of Russell’s analysis highlights the importance of investing in a well-diversified, multi-asset portfolio.
Despite month to month volatility from concerns about Europe, U.S. fiscal cliff negotiations and a Chinese slow down, most asset classes returned at least high single digit if not double digit returns in 2012. Australian equities and global shares (hedged) delivered nearly 20% and global shares (unhedged) delivered 14.7%, pushing the 2011 performance winners – Australian and international bonds – from the top spots. Even with this fall, bonds returned solid results with Australian bonds at 7.7% and international bonds at 9.7%.
Once again, those ‘playing it safe’ by sitting on the investment sidelines in cash during 2012 would have missed out on the strong performance of growth assets, with cash only returning 4%.
Director of Client Investment Strategies at Russell Investments Scott Fletcher said: “The risk-on, risk-off volatility is likely to continue in the foreseeable future and the risk vs. return analysis demonstrates the value of diversification, particularly in this environment. The results of the analysis continue to support our belief that a well-diversified, multi-asset portfolio which adapts to a changing environment, is the best way to more consistently achieve investors’ goals.”