The financial planning advisers in our Perth office would like to provide a quick review of 2015 and what it may mean to you in 2016. We are going to provide some information for you courtesy of Dr Shane Oliver, who is the Chief Economist and Head of Investment Strategy and Economics of our parent company, AMP Capital.
On 21 January 2016, Dr Oliver wrote an article on the AMP Capital blog called, “2016 – A list of lists regarding the macro investment outlook.” The article covered many facets of the economy and how they performed last year. We are going to give you a look at some of the highlights.*
2015: What Happened?
2015 provided mixed returns for investors. Monetary conditions “remained easy” while the global economy saw mild growth. However, global markets did suffer from a variety of fears, such as dropping commodity prices, China being in the forefront of a possible emerging market crisis, the first interest rate hike in the US over seven years and Australia continuing a “soft” pattern of growth.*
To give an idea of performance, Australian balanced super funds provided average returns of 5.0%. Considering an average of 10.1% pa returns over the preceding three years, this was disappointing to many.*
Dr Oliver provided four “lessons” from 2015:*
Growth is still slow across global markets, producing volatility.*
Deflation is a bigger threat than inflation.*
Despite volatility, diversified investment portfolios are outperforming bonds and cash.*
Diversification is “critical.”*
2016: What’s in Store?
Dr Oliver sees these trends for 2016:*
Global growth of 3%.*
Commodity prices to stabilise or rise slightly, even in the face of growing supply.*
Growth in Australia around 2.5% due to low commodity prices and low mining investments but with hope for improvement towards the end of the year.
Property and infrastructure will outperform cash and bonds.
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*AMP Capital, Dr Shane Oliver. “2016 – A list of lists regarding the macro investment outlook.” 21 January 2016.