economic and asset class update is an authorised representative of ri advice group pty ltd november...

Economic and Asset Class update

<Adviser name> is an Authorised Representative of RI Advice Group Pty Ltd

November 2011 - <Adviser Name>



My Name Financial




JV logo


Disclaimer

Important Notice

RI Advice Group Pty Ltd, ABN 23 001 774 125, holds Australian Financial Services Licence Number 238429 and is licensed to provide financial product advice and deal in financial products such as: deposit and payment products, derivatives, life products, managed investment schemes including investor directed portfolio services, securities, superannuation, Retirement Savings Accounts.

The information presented in this seminar is of a general nature only and neither represents nor is intended to be specific advice on any particular matter. RI Advice Group strongly suggests that no person should act specifically on the basis of the information contained herein but should obtain appropriate professional advice based on their own circumstances.

This information is current as at November 2011. Past performance is no guarantee of future performance.

November 2011

Economic & Asset Class Update

Section 1 – Economic update

United States: key stats

Interest Rate

GDP Growth Rate

Inflation Rate

Jobless Rate

Government Budget

Exchange Rate

0.25% 2.00% 3.50% 9.00% -10.30% 79.36

Source: TradingEconomics.com; Bureau of Economic Analysis

As at November 2011

United States: Employment

• Economic data on the whole beat expectations in October.

• Q3 GDP rose to 2.5% on a seasonally adjusted annualised rate.

• Employment continued to trend up in October (+80,000), and the

unemployment rate was little changed at 9.0%

90

95

100

105

110

115

120

125

-4 0 4 8 12 16 20

US GDP Cycles – Pre-recession Peak = 100

Current Cycle

Range of 8 previous cycles

10

Source: Thomson Financial Datastream & INGIM OptiMix

Quarters since peak in GDP

Source: Panning for Gold in a River of Mud – November 2011

Lewis South, Senior Portfolio Manager, OptiMix Multi Strategies Team

Developed world recovery has been lacklustre

Federal Reserve is a long way from meeting its mandate

Source: Thomson Financial & Bloomberg



Source: Bloomberg & INGIM OptiMix

Broad based weakening in Euro area activity



Developed markets outlook

• Aftershocks of 2008-09 GFC continue to impact

– Burden of high private sector debt was passed on to Governments

– Banking sector in Europe was never recapitalised

• Solutions are long term in nature

– History has shown it takes up to 10 years for debt reduction to occur

– Authorities need to redesign the entire Euro area framework

• Policy mix is poor

– Sizeable fall in Government spending in most major developed markets

– Monetary policy left to carry the burden (blunt instrument, most bullets fired)

Result: muddle through is best case with growth at or below potential



Business surveys point to slow growth in the US

Source: Thomson Financial & INGIM OptiMix



Fiscal austerity dragging on growth

Source: OECD, IMF & INGIM OptiMix

RegionHistorical average GDP growth 1980-

2008 (%)

Average growth 2010-2011

Planned fiscal contraction 2012-2013 (% of GDP)

US 3 2¼ -1¾

Euro area 2 1¾ -¾

- Germany 2 3¼ -½

- France 2 1½ -1

- Italy 1½ 1 -1½

- PIGS 3 -½ -1

UK 2½ 1¼ -1¾

OECD total 2¾ 2¼ -1½

15



Debt problem is a big issue in Europe

Source: BIS & INGIM OptiMix



Italy is fast approaching the point of no return

Source: Bloomberg



China: key stats

Interest RateGDP Growth

RateInflation

RateJobless

RateGovernment

BudgetExchange

Rate

6.56% 9.10% 5.50% 4.30% -2.50% 6.38

As at 28 November 2011

Recent slowing in China has been driven by the Gov’t

Source: JP Morgan



Gov’t debt is low compared to developed economies

Source: JP Morgan * includes local government debt



Chinese inflation has now peaked

Source: Thomson Financial & Bloomberg



Contribution to aggregate world GDP

2000 2010

Changing structure of global economy

Source: IMF & INGIM OptiMix



0

5

10

15

20

25

1 6 11 16 21 26 31 36 41 46 51 56

If history is a guide, China has a long way to go

Source: Conference Board & INGIM OptiMix

Per capita GDP (Start of major development phase = 1)

South Korea

Japan

China

23



Source: Google & INGIM OptiMix

CityMetro Population

(million)Lines in

operationPlanned new

lines

Guangzhou 12.0 6 20

Shenzhen 8.6 2 13

Tianjin 8.2 1 13

Chongqing 7.5 1 9

Nanjing 6.8 2 17

Wuhan 6.6 1 7

Hangzhou 6.3 0 9

Shenyang 5.1 1 11

Infrastructure still needs to be built



Global GDP will be very different again by 2020

Contribution to aggregate world GDP

2010 2020

Source: IMF & INGIM OptiMix



Australia: key stats

Interest RateGrowth

RateInflation

RateJobless

RateGovernment

BudgetExchange

Rate

4.50% 1.20% 3.50% 5.20% -4.30 1.00

Source: TradingEconomics.com; Australian Bureau of Statistics


RBA is currently achieving its goals

Source: ABS, RBA & INGIM OptiMix *Headline prior to 1983



Investment growth strong, dominated by mining

Source: ABS & INGIM OptiMix



Negative side effect from China’s boost

Source: ABS & RBA



Australia - Multi speed economy




Consumption has not been as weak as retail data suggests




Section 2 – Interest rate outlook

Markets are pricing significant rate cuts

Source: RBA & JP Morgan *OIS pricing as at 23rd November 2011



The Australian equity market looks cheap by any measure

8

10

12

14

16

18

20A

ug-9

0

Aug-9

1

Aug-9

2

Aug-9

3

Aug-9

4

Aug-9

5

Aug-9

6

Aug-9

7

Aug-9

8

Aug-9

9

Aug-0

0

Aug-0

1

Aug-0

2

Aug-0

3

Aug-0

4

Aug-0

5

Aug-0

6

Aug-0

7

Aug-0

8

Aug-0

9

Aug-1

0

Aug-1

1

ASX

200 -

Forw

ard

P/E

ASX 200 - Forward P/ E

Source: GS&PA Research Estimates



But the bond market has been right the last five years

Source: Bloomberg



Summary

• Developed economies

– Significant challenges ahead, with growth likely to only be modest at best

• China

– Short term concerns have been overplayed

– Long term drivers remain very positive

• Australia

– We have benefited, and continue to benefit, from the China story

– But not everyone benefits, with multi speed economy likely to remain a theme for some time

Market outlook: Equity market looks cheap but bond markets say be wary



Section 3 – Economic data

World economy – key economic indicators

Real GDP Growth – year ended

Source: Reserve Bank of Australian

Chart Pack November 2011


Core Consumer Price Inflation*

Year ended

InflationYear ended




Unemployment Rate



Australia – GDP Growth and Inflation

GDP Growth

Consumer Price Inflation*



Australia – Household Sector

Retail Sales Growth

Housing Loan Approvals*



Australia - Factors of Production and Labour Market

Labour Force

Employment



Australia – Commodity Prices

RBA Index of Commodity Prices2008/09 average = 100, SDR

Commodity Prices SDR, 2003 average = 100, weekly



World interest rates over time

Source: RBA, BOJ, ECB

http://www.fxstreet.com/fundamental/interest-rates-table/

As at November 2011

0

1

2

3

4

5

6

7

8

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2011

The Reserve Bank of Australia 4.50% European Central Bank 1.25%

Federal Reserve 0.25% Bank of J apan 0.10%

World interest rate movements in detail

Current rate Last movedDirection of last move

Australia 4.50% Nov 2011

United States 0% - 0.25% Dec 2008

Europe (ECB) 1.25% Nov 2011

Japan 0.10% Dec 2008

United Kingdom 0.50% Mar 2009

China 6.56% July 2011Source: RBA, BOJ, ECB

http://www.fxstreet.com/fundamental/interest-rates-table/

As at November 2011

• The Reserve Bank of Australia eased monetary policy in early November, cutting the official cash rate by 0.25% to 4.50%.

• This was the first move in interest rates since November 2010.

Interest rates

US Bond Yields 3 – 5 years

US Bond SpreadsTo US government bonds, 3–5 years



Interest rates

Australian Bond Yields*

Australian Bond Spreads*

Spread over government yields, monthly



Currency movements

$1 AUD buys: United States 1.0610

Europe (ECB) 0.7606

Japan 83.2300

United Kingdom 0.6573

Source: DataStream

As at 31 October 2011

Exchange rates

Australian Dollar against US Dollar, Euro and Yen



$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

$110,000

$120,000

1984 1987 1990 1993 1996 1999 2002 2005 2008 2011

Dow J ones Nikkei All Ords FTSE

Global markets long term performance

Source: IRESS


$97,946 $8,909 $55,254 $52,159

Growth of $10,000 as at 31 October 2011

Global share market returns

Source: Datastream


1 year % 3 years % p.a. 5 years % p.a.

S&P 500 Index (US) 5.92 8.96 -1.88

NASDAQ (US Tech.) 7.06 15.97 2.55

Dow Jones (US) 7.52 8.63 -0.21

Nikkei 225 (Japan) -2.33 1.57 -11.33

Hang Seng (Hong Kong) -13.99 12.45 1.63

DAX (Germany) -6.97 7.18 -0.41

CAC40 (France) -15.41 -2.39 -9.52

FTSE 100 (UK) -2.31 8.20 -1.99

ASX 200 (Aust.) -3.65 6.94 -0.18

Global Index Summary as at 31 October 2011

Global vs. Australian shares over time

Source: Datastream

Timeframe: 01/01/98 – 31/10/11

Data: Australian shares - S&P/ASX 300 Accum. Index, International Shares - MSCI World (ex Aus) in $A

Growth of $10,000 invested from January 1998 to October 2011.

A$28,169

A$9,344

$7,500

$10,000

$12,500

$15,000

$17,500

$20,000

$22,500

$25,000

$27,500

$30,000

$32,500

$35,000

$37,500

$40,000

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

S&P/ASX 300 Accumulation Index MSCI World Ex Aus $A

$4,000

$4,500

$5,000

$5,500

$6,000

$6,500

$7,000

$7,500

$8,000

$8,500

$9,000

$9,500

$10,000

$10,500

$11,000

$11,500

$12,000

$12,500

Jan-07

Apr-07

J ul-07Oct-

07J an-08

Apr-08

J ul-08Oct-

08J an-09

Apr-09

J ul-09Oct-

09J an-10

Apr-10

J ul-10Oct-

10J an-11

Apr-11

J ul-11Oct-

11

S&P/ASX 300 Accumulation Index A$6,782 Dow J ones A$6,738

Australian vs. US markets

Source: Iress


Growth of $10,000 invested in Australian and US markets

over time

Section 4 – Asset class review

Key asset sector index performance summary

1 month %

3 months %

1 Year %3 Years % p.a.

5 Years % p.a.

Global Equities

(MSCI World [ex-Australia] Index, unhedged)0.87 -2.94 -5.54 -5.30 -6.75

Australian Equities

(S&P/ASX 300 Accumulation Index)7.23 -1.49 -3.87 7.06 -0.24

Property Securities

(S&P/ASX 200 A-REIT Accumulation Index)3.80 2.21 -2.25 -1.67 -12.79

Australian Fixed Interest

(UBS Australian Composite Bond Index)-0.57 2.32 8.42 6.90 6.96

Global Fixed Interest

(Barclays Capital Global Aggregate Index Hedged $A)0.34 3.10 7.84 10.67 8.48

Cash

(UBS Australian Bank Bill Index)0.42 1.24 5.02 4.44 5.54

Source: Datastream


Index Performance Summary 31 October 2011

Global shares

• The MSCI World (ex Australia) Index rose by 0.9% in AUD terms over the month of October.

• The solid appreciation of the AUD against most currencies - US Dollar (9%) and Japanese Yen (10.6%) - detracted from the strong rally in global equity markets.

• Investors increased risk in their portfolios as global equities rebounded sharply.

• Rebound was driven by a belief that a breakthrough was imminent in European leaders’ discussions regarding containing the debt crisis to Greece.

• Better than expected US growth and the potential for monetary stimulus in places like China, Australia, Europe and India also lifted sentiment.

Source: OptiMix Economic Highlights and Asset Sector Review – October 2011

Based on information provided by ING Investment Management ‘s Multi Strategies Team

Global shares con’t.

• In local currency terms the US share market rose significantly by 10.8%

• European markets also rallied by 7.5% despite weak macro conditions.

• Germany’s stock market, in particular, rebounded strongly by 11.7% leaving only Greece and Portugal negative across the Euro region.

• The UK was up strongly by 8.0% over the month.

• In Asian equity markets Hong Kong rose by 12.1% and Singapore was up 6.2% over the month.

• The Japanese equity market only moved up marginally by 0.9% in October as investors sought other equity markets which had been significantly sold-off.



Global emerging markets

• Emerging markets shares, as measured by the MSCI Emerging Market Index, rose by 3.7% in October, in AUD terms.

• Asia (9.5%) was the best performing region in October, followed by Latin America (8.5%) and EMEA (7.6%).

• At the sector level, cyclical sectors such as Energy (11.5%), Financials (11%), Industrials (10%) and Materials (9.5%) outperformed the broader index.

• Defensive sectors such as Health Care (2.7%), Consumer Staples (6.1%) and Utilities (7.6%) underperformed over the month.



Australian equities

• Investors sought to add risk to their portfolios in October, enabling the Australian share market to record a solid gain.

• The Australian sharemarket as represented by the ASX300 Accumulation Index had its strongest performance (+7.2%) since July 2009.

• Agreements reached at the EU summit indicated a level of progress towards resolving the European debt issues.

• Strong gains were seen across the All Industrials (+6.4%) and Resources (+9.1%).

• Small Caps (+7.9%) and Large Caps (+7.2%) rallied strongly.

• The strong market level performance was largely driven by the cyclical sectors and companies.

• Within Resources (+9.1%), the Energy sector (+12.2%) delivered the strongest gains.

• Banks (+10.7%) and Insurance (+9.7%) drove the strong Financials (+9.2%) sector returns.

• Defensive sectors including Consumer Staples (+0.3%), Healthcare (+1.5%), Telcos (-0.1%) and Utilities (+3.0%) underperformed Cyclical sectors as investors’ risk appetite returned.



Australian fixed interest

• The Australian fixed interest market returned -0.57% over the month of October but delivered an 8.42% return over the last year.

• An easing in concerns surrounding the European sovereign debt crisis saw a reversal of some of the previous falls in bond yields as equity markets recovered somewhat from their recent lows.

• Bond yields rose across all maturities, with 3-year yields rising +26bps to 3.88% and 10-year yields rising by +29bps across the month to 4.51%.

• The Reserve Bank of Australia cut rates by 0.25% at its November policy meeting to 4.5%.

• This is the first time rates have moved since November 2010.



International fixed interest

• The Barclays Capital Global Aggregate (Hedged in AUD) returned 0.34% over the month of October.

• The weak market return for the month resulted from:

– easing of concerns over the European sovereign debt situation.

– a run of stronger US economic activity indicators lowered concerns over the potential for a renewed period of US recession.

– economic indicators in China were increasingly suggestive of a modest soft landing in economic growth unfolding.

• US 10-year bond yield rose more than 60bps to an intra-month high of 2.40% before finishing the month at 2.11%

• The UK bond market outperformed most other developed bond markets during October following the Bank of England’s decision to increase the size of their asset purchase programme.

• The European component of the bond market in contrast underperformed the global government index, returning -0.86% in the month.



Australian property securities

• The S&P/ASX 300 A-REIT Accumulation Index rose by 3.8% over the month of October.

• At the sectoral level - the industrial (+8.7%) sector rebounded strongly from a heavy fall the previous month, significantly outperforming the diversified (+6.2%), commercial (+2.6%) and retail (+1.5%) sectors.



Global property securities

• Global property securities rose strongly in October, with the UBS Global Investors Index rising by 9.9% in local currency terms.

• Strength was almost uniformly evident at the regional level, with each of North America (+13.9%), the UK (+7.6%), Continental Europe (+5.3%) and Singapore (+5.1%) recording gains in excess of 5%.

• Japan (-2.8%) was the sole area of underperformance for the month.



Section 5 – Asset class performance over time

3000

3250

3500

3750

4000

4250

4500

4750

5000

5250

J ul-08

Oct-08

J an-09Apr-0

9J ul-0

9

Oct-09

J an-10Apr-1

0J ul-1

0

Oct-10

J an-11Apr-1

1J ul-1

1

Oct-11

Australian sharemarket - S&P/ASX 300

Source: Iress - S&P/ASX 300


The Australian share market closed up 7.23% as at 31 October 2011.

March 6, 2009

3133.8

Oct 31, 2011

4294.9

$0

$25,000

$50,000

$75,000

$100,000

$125,000

$150,000

$175,000

$200,000

$225,000

$250,000

$275,000

$300,000

$325,000

$350,000

$375,000

$400,000

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Australian shares $289,510 International shares $140,941 Listed property $129,134

Aust. fixed interest $153,051 Cash $100,344 Inflation $32,327

Timeframe: 01/01/83 – 31/10/11

Data: Australian shares - S&P/ASX 300 Accum. Index, International Shares - MSCI World (ex Aus) in $A, Listed Property Trusts - S&P/ASX 200 Prop Trust, Australian Fixed Interest: Commonwealth Bank Bond Index (Pre Sept 89) / UBSA Composite Bond All Maturities Index (Post Sept 89), Cash: 11am Cash Rate (Pre Apr 87) / UBS Bank Bill Index (Post Apr 87).

Source: RBA, DataStream

Growth of $10,000 over time

Long term asset class performance

-8.00%

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11

Australian shares 7.23% International shares 0.87% Listed property 3.80%

Aust. fixed interest -0.57% International fixed interest 0.34% Cash 0.42%

Timeframe: 31/10/10 – 31/10/11

Data: Australian shares - S&P/ASX 300 Accum. Index, International Shares - MSCI World (ex Aus) in $A, Listed Property Trusts - S&P/ASX 200 Prop Trust, Australian Fixed Interest: Commonwealth Bank Bond Index (Pre Sept 89) / UBSA Composite Bond All Maturities Index (Post Sept 89), Cash: 11am Cash Rate (Pre Apr 87) / UBS Bank Bill Index (Post Apr 87)

Source: RBA, DataStream

Monthly returns as at 31 October 2011

Short term asset class performance

1 year returns as at 31 October 2011

Timeframe: 31/10/2011

Data: Australian shares - S&P/ASX 300 Accum. Index, International Shares - MSCI World (ex Aus) in $A, Listed Property Trusts - S&P/ASX 200 Prop Trust, Australian Fixed Interest: Commonwealth Bank Bond Index (Pre Sept 89) / UBSA Composite Bond All Maturities Index (Post Sept 89), Cash: 11am Cash Rate (Pre Apr 87) / UBSA Bank Bill Index (Post Apr 87)

Source: DataStream

5.02%

-5.54%

-3.87%-2.25%

8.42% 7.84%

- 10.00%

- 5.00%

0.00%

5.00%

10.00%

Australianshares

Internationalshares

Propertysecurities

Australian fixed interest

International fixedinterest

Cash

Short term asset class performance

Section 6 – The benefits of staying invested

The two greatest strategies that can help reduce the risk of a negative outcome

1. DiversificationSpreading investments across multiple asset classes can help reduce risk.

2. Time

Time in the market can help reduce the chance of a negative outcome.

Data: Australian Shares - S&P/ASX 300 Accum. Index, International Shares - MSCI World (ex Aus) in $A - unhedged, Property Securities - S&P/ASX 200 Prop Trust, Australian Fixed Interest: Commonwealth Bank Bond Index (Pre Sept 89) / UBSA Composite Bond All Maturities Index (Post Sept 89), Source: Datastream. Note: Returns based on October 1 year rolling returns.

Highest returns Lowest returns

The importance of diversificationSpreading your assets and investments across various asset classes can be the best way to guard against short term volatility in any one asset class.

Aust. Shares

Int'l. Shares

PropertyAust. Fixed

InterestInt'l. Fixed

InterestCash

Oct-83 42.99% 33.54% 38.37%Oct-84 14.31% 16.40% 24.74% 15.04% 10.68%Oct-85 42.09% 58.39% 3.67% 8.20% 14.52%Oct-86 39.16% 62.77% 29.26% 16.83% 37.27% 17.35%Oct-87 -3.49% 16.95% 14.32% 16.18% 8.10% 15.80%Oct-88 27.70% -1.74% 7.31% 15.22% -8.28% 12.82%Oct-89 9.77% 19.74% 4.70% 8.52% 8.22% 17.59%Oct-90 -14.73% -10.99% 13.28% 19.82% 11.19% 17.19%Oct-91 32.97% 17.21% 10.28% 25.67% 11.44% 11.98%Oct-92 -11.69% 6.95% 7.71% 12.97% 28.34% 7.38%Oct-93 53.70% 33.04% 25.46% 17.57% 16.98% 5.58%Oct-94 0.16% -3.03% -0.06% -6.08% -6.95% 5.08%Oct-95 5.86% 7.42% 8.85% 16.60% 12.23% 7.87%Oct-96 18.23% 12.04% 14.17% 14.56% 1.06% 7.68%Oct-97 9.01% 32.35% 17.43% 13.23% 15.44% 5.98%Oct-98 11.60% 31.25% 19.53% 9.65% 27.50% 5.14%Oct-99 12.97% 22.55% -1.16% -0.61% -4.75% 4.94%Oct-00 16.02% 24.78% 13.57% 7.60% 17.09% 6.07%Oct-01 3.38% -23.53% 21.06% 11.67% 11.82% 5.61%Oct-02 -2.64% -22.58% 10.04% 4.24% -0.76% 4.67%Oct-03 12.52% -3.01% 6.32% 4.15% -10.61% 4.88%Oct-04 20.56% 7.81% 28.83% 7.17% 5.17% 5.54%Oct-05 22.67% 13.53% 12.05% 5.18% -1.78% 5.71%Oct-06 26.33% 17.50% 29.12% 4.40% 1.65% 5.90%Oct-07 30.46% 0.23% 18.43% 3.62% -8.67% 6.61%Oct-08 -38.29% -16.67% -55.20% 10.60% 7.81%Oct-09 21.96% -13.95% -7.29% 4.89% 13.41% 3.82%Oct-10 4.67% 4.49% 4.93% 7.44% 10.84% 4.49%Oct-11 -3.89% -5.52% -2.24% 8.41% 7.84% 5.02%

Average return 13.94% 11.65% 10.95% 10.10% 8.15% 8.35%

Every asset class has its day…

$123,527 $181,280$166,206 $190,378 $206,634

$0

$25,000

$50,000

$75,000

$100,000

$125,000

$150,000

$175,000

$200,000

$225,000

$250,000

$275,000

$300,000

1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

Defensive (80/20) Conservative (60/40) Moderate (40/60) Growth (20/80) High Growth (0/100)

…determine your goals and risk profile

Timeframe: 01/01/83 – 31/10/11 Data: Australian shares - S&P/ASX 300 Accum. Index, International Shares - MSCI World (ex Aus) in $A, Listed Property Trusts - S&P/ASX 200 Prop Trust, Australian Fixed Interest: Commonwealth Bank Bond Index (Pre Sept 89) / UBSA Composite Bond All Maturities Index (Post Sept 89), Cash: 11am Cash Rate (Pre Apr 87) / UBS Bank Bill Index (Post Apr 87)

Growth of $10,000 over time using different risk return strategies

It pays to stick to your investment plan

Source: S&P/ASX 300 ACC Index As at 31 October 2011

Markets will always fluctuate but the longer you stay invested, the less affected you are by short-term volatility.

Short term pain…

Long term gain…

Rolling 1 Year Returns

-50.00%

-30.00%

-10.00%

10.00%

30.00%

50.00%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Rolling 10 Year Returns

-50.00%

-30.00%

-10.00%

10.00%

30.00%

50.00%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Time in the market

• Smooth the ride. Markets will always fluctuate but the longer you stay invested, the less affected you are by the short-term volatility.

• Don’t miss the recovery. In many instances when investment markets recover they tend to bounce back quickly. Withdrawing from the market means you risk missing out on the best gains.

• Long-term rewards. Market volatility may lead to short-term downturns in your portfolio. But history shows that markets will generally recover these losses over the long term.

Days invested Value since 1993 Average annual return

Invested for all days $39,927 11.04%

Minus 10 best days $25,480 7.33%

Minus 25 best days $15,318 3.28%

Minus 50 best days $8,159 -1.53%

Data: All Ordinaries Accumulation Index 01/01/1993 – 30/06/2011

Time in is everything – the benefits of staying invested

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

$55,000

$60,000

1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

All days $39,927 Minus 10 best days $25,480

Minus 25 best days $15,318 Minus 50 best days $8,159

How missing the best trading days can significantly affect returns $10,000 invested in the All Ords Accumulation Index between January 1993 and June 2011


$39,927

$25,480

$15,318

$8,159

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

All days Minus 10 best days Minus 25 best days Minus 50 best days


How missing the best trading days can significantly affect returns $10,000 invested in the All Ords Accumulation Index between January 1993 and June 2011


3.28%

7.33%

-1.53%

11.04%

- 4.00% - 2.00% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00%

Minus 50 best days

Minus 25 best days

Minus 10 best days

All days


How missing the best trading days can significantly affect returns Average annual return between January 1993 and June 2011.


Thank you

economic and asset class update is an authorised representative of ri advice group pty ltd november...

Documents

specific advice

financial product advice

financial products

economic updateunited

bureau of economic analysisas

portfolio services

life products

payment products