Russell Investments & ASX
Long-term Investing Report

The 2017 Russell Investments/ASX Long-term Investing Report shows how five major threats to long-term wealth creation could potentially play out for millions of Australians:
  • Rear-view mirror investing
  • Lack of portfolio diversification
  • Reliance on residential property
  • Investing in over-priced traditional assets
  • Setting and forgetting

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Helping you achieve your client outcomes


Traditional investment approaches are unlikely to achieve the returns investors need to achieve their goals as lower returns and the potential for increasingly volatile markets are predicted for core asset classes. So where and how can investors find optimum returns while mitigating risk?




Summary





Rear-view mirror investing

Making investment decisions based on past performance is a high-risk strategy at the best of times and we never recommend it. In the current climate where the strength of investment fundamentals has weakened and new norms are being created, it is even more important that investors look beyond historical numbers and incorporate new investment insights. This is due to the dramatic global economic and political uncertainty that has and will change the drivers of success for future investment performance. 





Lack of portfolio diversification

As this Report shows, all asset classes are vulnerable to the vagaries of the market. Having a narrowly focused portfolio by putting all your eggs in one of two asset classes exposes investors to a lot of unnecessary downside risk.






Reliance on residential property

Following residential property's star performance up to 2015, it again retained its place in 2016. However, we believe it carries significant stock-specific risk for people seeking stable, positive returns. While residential property overall has achieved strong positive returns over the last 10 and 20 years, it would be a mistake to blindly rely on the upward trend continuing across the board i.e. for the one or two properties an investor may have exposure to. 






Investing in over-priced traditional assets

Many global market commentators agree that the low-yield, highly dynamic environment we highlighted in last year's Report is likely to continue for core asset classes, especially shares and bonds. Our investment strategist group continues to forecast lower returns and higher volatility going forward as equity markets (especially in the U.S.) are becoming more and more expensive, while markets may experience sharp sudden falls as unprecedented levels of political changes in numerous countries create fear and uncertainty.





Setting and forgetting

We detail what you need to do to effectively manage your portfolio including understanding your current portfolio exposures and the options for changing your approach to get from where your portfolio is now to where you want to be. Lastly, we compare how your decision-making and implementation processes with the outcomes you are trying to achieve.
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