The volatile nature of financial markets can be highlighted by Mercer’s Periodic Table (‘our Table’) of index returns. Produced annually, it colour-codes 17 major asset classes and ranks how each performed, on an annual basis, over the last 10 years. Attached is an interactive version and printable version of our Table for the 2022 calendar year.
Taking a glance at the Table, with its scattered palette, highlights how difficult it is to unearth patterns or at least patterns that could be of use going forward. Last year’s stars may prove to be a winner again the next year or may sink to occupy lower ranks. If only investing were easy!
Demystifying the Periodic Table
Looking across 2022 and the past decade, the following observations can be made from our Table:
- Fifteen of the 17 asset classes generated a negative return last year, compared to only four asset classes in 2021, showing the breadth of financial market correction in 2022.
- Leading the positive returns in 2022 was Australian Direct Property, with a stellar positive return of 10.7%, reflecting that investors sought out alternative inflation linked sources of return.
- Cash featured in second place in 2022, with a positive return of 1.3%, as confidence in risky assets declined with the tightening of monetary policy.
- Australian equity declined 2.7%, which was relatively moderate compared to other asset classes, as Australia benefitted from elevated commodity prices and the eventual re-opening of China in November 2022. Australian Small Caps on the other hand, down 18.4%, underperformed the broader index.
- International Equity (H) declined 18.1%, with a re-pricing of (especially) US and Growth style equities; as did Global Listed Property (H), down 23.5%, in anticipation of the impact of rising interest rates.