A decade has now passed since I first wrote a note suggesting that we are coming into an environment of low and volatile investment returns. At the time, I and various investment strategists were concerned the drivers of the super normal returns from most asset classes from the early 1980s had largely run their course and
therefore, sustainable returns would revert to longer term norms.
While a high return world lingered for Australian-based investors up until 2007 (thanks to a strong performance by the Australian share market during the first mining boom), low sub-par medium term returns have been a phenomenon for US and European investors for the last decade and even longer for Japanese investors.
This all begs several questions – if the low return world is more than a decade old is it nearly over? If not, what does it mean for the way we manage money?