Top asset classes revealed

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Ensuring your clients have a well-diversified, multi-asset portfolio will be more important than ever over the next year, according to the 2013 Russell Investments risk versus return analysis.

The analysis charts the annual returns of different asset classes over the past three decades to demonstrate how the returns of the various classes differ significantly year to year and over the long-term.

A-REITs made up for their losses in previous years by achieving a 32.8% return in 2012. Australian equities and hedged global shares delivered nearly 20% while un-hedged global shares delivered 14.7%. Australian and international bonds fell from their top spot in 2011, but still had a return of 7.7%. Those 'playing it safe' by sitting in cash during 2012 would have missed out on the strong performance of growth assets, with cash only returning 4%.

Director of Client Investment Strategies at Russell Investments Scott Fletcher said the results continued to emphasise the need for a well-diversified portfolio that adapts to a changing environment.

“The risk-on, risk-off volatility is likely to continue in the foreseeable future and the risk vs. return analysis demonstrates the value of diversification, particularly in this environment,” he said.

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