Investors chase past returns

THE most popular category of unit trusts last financial year was international share funds, according to the latest ASSIRT Market Share Report.

And guess which sector produced the worst returns last financial year? International shares.

Yet again, investors seem to have made the classic mistake of chasing past high returns, and losing badly as a consequence.

International shares have produced impressive returns for most of the past decade. In 1999-2000, the median return from international share funds was an eye-catching 27.6 per cent according to InTech.

Australian retail investors responded by pouring an extra $3.5 billion into international share funds, according to ASSIRT.

Most of these investors will be disappointed, since the median return in 2000-01 sank to minus 5.1 per cent. Behind this figure lies an extremely wide range, from minus 24.4 per cent by Invesco’s International Growth fund to plus 20.8 per cent by Platinum’s International Brands fund.

The investors who have reaped the high long-term returns are generally those who have patiently kept a portion of their money in international shares.

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