New Zealand shares are overdue for a period of outperformance, according to New Zealand Funds chief investment officer Michael Lang."Historically, global shares have returned around 9 percent per annum. But over the past 10 years they only returned n
New Zealand shares are overdue for a period of outperformance, according to New Zealand Funds chief investment officer Michael Lang.
"Historically, global shares have returned around 9 percent per annum. But over the past 10 years they only returned negative 0.79 percent per annum, suggesting they are overdue for a period of outperformance," he said.
When an asset class experienced a period of underperformance at some point in the future it would "catch up", resulting in a period of outperformance.
Sharemarket booms could be as much as 20 years apart.
"Given that we have already had 10 bad years, the probability of a strong share market run increases with each year," Mr Lang said.
Since 1900, the average market uptrend had lasted approximately 10 years and had delivered a return above inflation of on average 9.3 percent per annum.
The infrastructure, healthcare and consumer staple sectors were the most likely to deliver inflation protection, a steady source of income and rewarding capital gains. They were also defensive investments.
"Some sectors of the share market participate almost equally in the upside but show more stability than others during down years. A number of these sectors also exhibit strong income generating potential through high and stable dividends and have systematically protected investors' capital during periods of high inflation."
