In its research paper, Independent Assessment of Historical Australian Share Market Returns over 20 years to 30 June 2013, the boutique firm found investors who held investments for the whole 20-year period would have achieved an average return of 9.6 per cent per annum.
However, an investor who held investments for the last five-year period would have only achieved an average market return of 2.9 per cent.
“Future outcomes will depend on a range of factors, including how the global economies unfold from here, how corporate earnings respond and how investors perceive value and growth,” the boutique firm's Mark Hancock said.
“[But] when you take a step back it is evident that patience has been rewarded for Australian equity investors who experienced the prolonged and adverse period of the GFC.”
The report also provides a breakdown of the returns, showing that over the last 20 years the average price gain for shares was 5.2 per cent per annum and average yearly dividend return was 4.1 per cent.
Precept Investment Actuaries stated that this highlights the often overlooked importance of dividends and franking credits on long-term investor returns.
The Actuaries Institute – which provides grants for similar research projects – said these types of reports are helpful in providing research across a broad range of organisations and industries.
“As ever, actuaries are uniquely placed to objectively analyse and provide an impartial perspective on a variety of topics through long-term analysis, modelling and scenario planning,” institute chief executive Melinda Howes said.
