Investors get a 20% return on ASX200 in 2013: Why this year is unlikely to be a repeat

The riskiest investment classes saw the greatest return in 2013.

When it comes to the most common investment vehicles used by Australians, most had a solid year. But experts caution 2014 is unlikely to be as rosy.

In 2013, the ASX200 was up 14.06%, which saw returns of around 20% to investors once you count dividends. Property prices rose 9.8% in capital cities according to RP Data, and superannuation saw returns of 15.5% for median balanced options, the best return since independent superannuation research agency Super Ratings began its index in 2000.

Dale Gillham, chief analyst at private investment company Wealth Within, tells SmartCompany investors were “sick and tired of being sick and tired”, with this feeding through to a more positive investment climate.

It wasn’t just Australia having an optimistic year half a decade since the start of the global financial crisis. Global sharemarkets rallied, with American sharemarkets up 25%, and Japanese sharemarkets surging 50% in the wake of the country’s extensive monetary stimulus. This fed through to local companies. The Australian dollar was 14% lower on January 1 than a year earlier, which helped the balance sheets of Australian companies exposed to the American market.

In the long run, however, Gillham does not characterise 2013 as an unusual year, describing it instead as “average”.

“The fear is subsiding,” he says. “We’ve had four years of very bad news with all sorts of crises. But eventually, people have to buy a new car, and they get tired of being sick and tired.

“And businesses are more prepared to make decisions now.”

Over the next few years, Gillham expects this to contribute to a far stronger economy. But this year, he’s not too optimistic investors will see much short-term return.

“I don’t think superannuation is going to do very well this year, simply because we’re due for a pullback on our market. Four years ago – 2009 – was our last major low. We generally get a pullback every four to five years. So I expect markets to come down in the first half of the year.

“What happens with investment cycles is you get bad news, then no news, then good news. We’re going through the no-news period. I think the next few years are going to see a boom. So it’s time for investors to get set and think long term.”