Invest
Investor returns predicted to sink even further
With the next five years likely to continue the lower for longer investment trend, there is only one antidote for low-return environments, according to a global asset manager.
Investor returns predicted to sink even further
With the next five years likely to continue the lower for longer investment trend, there is only one antidote for low-return environments, according to a global asset manager.
Speaking at Vanguard’s adviser roadshow, the company’s global chief economist Joseph Davis said the firm’s investment outlook was bearish.
“For the next five years, the financial market returns that we are anticipating for all asset classes globally are the most guarded that we have generated since 2006, though not at the low levels we were anticipating at that time,” Mr Davis said.
“In my mind, the investment numbers for the next five years are going to be more challenging than they have been for the previous five, despite the fact that we are seven years into the global economic recovery.”
With that in mind, Mr Davis said investors will have to become accustomed to this kind of environment and find savings where they can.
“Decreasing investment costs is very powerful. You see the return on capital tenfold in the power of return relative to asset allocation,” he said.
“Working longer, saving longer is a very effective antidote in an environment of low returns [even though] it may not be the most compelling thing that we may want to do. It’s always nice when the financial markets do a great deal of the heavy lifting and they have done a lot over the last five or six years.”
Pointing to US President Donald Trump’s proposed threats to free trade, Mr Davis said raising trade barriers is not the way to resurrect sectors in decline.
“This is a misdiagnosis of the problem. No matter how high you raise tariff rates, they will not change trade deficits,” he said
“It is not globalisation that has been the primary reason why manufacturing jobs have declined over the last few years, it is technology.”
Mr Davis predicted that the current trend is only indicative of more to come in the way of automation and increasing wage inequality.
“Unless the computer is a complement to the job you do, rather than a substitute, there’s going to be an increasing threat of automation going forward,” he said.
“My point here is not to be bearish. We will see productivity return, but it does mean we will continue to see income inequality rise on a secular basis.”
RELATED ARTICLES
Property
New investment platform Arkus allows Australians to invest in property for just $1
In a groundbreaking move to democratise investment in property-backed mortgage funds, GPS Investment Fund Limited has launched Arkus™, a retail investment platform designed to make investing ...Read more
Property
Help to Buy goes live: What 40,000 new buyers mean for banks, builders and the bottom line
Australia’s Help to Buy has opened, lowering the deposit hurdle to 2 per cent and aiming to support up to 40,000 households over four years. That single policy lever will reverberate through mortgage ...Read more
Property
Australia’s mortgage knife‑fight: investors, first‑home buyers and the new rules of lender competition
The mortgage market is staying hot even as rate relief remains elusive, with investors and first‑home buyers chasing scarce stock and lenders fighting for share on price, speed and digital experienceRead more
Property
Breaking Australia’s three‑property ceiling: the finance‑first playbook for scalable portfolios
Most Australian investors don’t stall at three properties because they run out of ambition — they run out of borrowing capacity. The ceiling is a finance constraint disguised as an asset problem. The ...Read more
Property
Gen Z's secret weapon: Why their homebuying spree could flip Australia's housing market
A surprising share of younger Australians are preparing to buy despite affordability headwinds. One in three Gen Z Australians intend to purchase within a few years and 32 per cent say escaping rent ...Read more
Property
Tasmania’s pet-positive pivot: What landlords, BTR operators and insurers need to do now
Tasmania will soon require landlords to allow pets unless they can prove a valid reason to refuse. This is more than a tenancy tweak; it is a structural signal that the balance of power in rental ...Read more
Property
NSW underquoting crackdown: the compliance reset creating both cost and competitive edge
NSW is moving to sharply increase penalties for misleading price guides, including fines linked to agent commissions and maximum penalties up to $110,000. Behind the headlines sits a more ...Read more
Property
ANZ’s mortgage growth, profit slump: why volume without margin won’t pay the dividends
ANZ lifted home-lending volumes, yet profits fell under the weight of regulatory and restructuring costs—an object lesson in the futility of growth that doesn’t convert to margin and productivityRead more
Property
New investment platform Arkus allows Australians to invest in property for just $1
In a groundbreaking move to democratise investment in property-backed mortgage funds, GPS Investment Fund Limited has launched Arkus™, a retail investment platform designed to make investing ...Read more
Property
Help to Buy goes live: What 40,000 new buyers mean for banks, builders and the bottom line
Australia’s Help to Buy has opened, lowering the deposit hurdle to 2 per cent and aiming to support up to 40,000 households over four years. That single policy lever will reverberate through mortgage ...Read more
Property
Australia’s mortgage knife‑fight: investors, first‑home buyers and the new rules of lender competition
The mortgage market is staying hot even as rate relief remains elusive, with investors and first‑home buyers chasing scarce stock and lenders fighting for share on price, speed and digital experienceRead more
Property
Breaking Australia’s three‑property ceiling: the finance‑first playbook for scalable portfolios
Most Australian investors don’t stall at three properties because they run out of ambition — they run out of borrowing capacity. The ceiling is a finance constraint disguised as an asset problem. The ...Read more
Property
Gen Z's secret weapon: Why their homebuying spree could flip Australia's housing market
A surprising share of younger Australians are preparing to buy despite affordability headwinds. One in three Gen Z Australians intend to purchase within a few years and 32 per cent say escaping rent ...Read more
Property
Tasmania’s pet-positive pivot: What landlords, BTR operators and insurers need to do now
Tasmania will soon require landlords to allow pets unless they can prove a valid reason to refuse. This is more than a tenancy tweak; it is a structural signal that the balance of power in rental ...Read more
Property
NSW underquoting crackdown: the compliance reset creating both cost and competitive edge
NSW is moving to sharply increase penalties for misleading price guides, including fines linked to agent commissions and maximum penalties up to $110,000. Behind the headlines sits a more ...Read more
Property
ANZ’s mortgage growth, profit slump: why volume without margin won’t pay the dividends
ANZ lifted home-lending volumes, yet profits fell under the weight of regulatory and restructuring costs—an object lesson in the futility of growth that doesn’t convert to margin and productivityRead more
