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2016 year in review: highlights and lessons for investors


In this video, AMP Capital’s Head of Investment Strategy and Chief Economist, Shane Oliver, discusses the highlights from the year and the lessons for investors.

   

In the video below, AMP Capital’s Head of Investment Strategy and Chief Economist, Shane Oliver, discusses the highlights from the year and the lessons for investors.

2016 started badly for investors with worries about global growth and deflation but global growth was modest despite political events, rising bond yields and disappointing Australian growth.

Share markets started 2016 badly on growth and deflation fears before rebounding as such fears faded. The Brexit vote, the US election and the Italian referendum caused only short lived scares. In fact, 2016 saw a classic reversal of some of the relative share market performances that had been seen into 2015, with: US shares outperforming in developed markets as the Fed paused, the US earnings recession ended and investors anticipated stimulus under a Trump presidency; resources shares outperforming as commodity prices rebounded helping the Australian share market to perform relatively well; and emerging markets doing well led by Brazil.

Some other highlights:

  • After a huge rally in the first half of the year bonds bond returns were subdued with the anticipation of fiscal stimulus under Donald Trump.
  • Real estate investment trusts surged in the first half of the year, but fell as bond yields rose, constraining their returns.
  • Unlisted commercial property and infrastructure continued to benefit as investors sought decent income yields.
  • Australian residential property returns were solid but slowed and remained concentrated in Sydney and Melbourne.
  • Cash rates and bank term deposit returns were poor reflecting record low RBA interest rates.
    Overall, balanced superannuation funds returns were subdued, but better than cash and bank deposits.
About the author
Shane Oliver, Head of Investment Strategy and Economics and Chief Economist at AMP Capital is responsible for AMP Capital's diversified investment funds. He also provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets.
Funds related to this article: Dynamic Markets Fund

Navigating the ups and downs of the market cycle. This fund uses dynamic asset allocation to actively adjust the split of investments across asset classes to achieve diversification in response to market changes.

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1Consumer Price Index (CPI) - the Reserve Bank of Australia inflation rate, trimmed mean

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