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Writedown minimised

THE level of personal wealth currently being wiped off investors’ portfolios by the world market slowdown is the largest loss in more than 50 years.

September was a particularly bleak month for share investors, with international shares down 11.2 per cent in local currency terms and 9.9 per cent in Australian dollar terms, ac-cording to an InTech research report.

The Australian market fared better than average but was still down more than 4 per cent during the month.

The downward spiral has left most growth-orientated superannuation funds deep in the red for the past financial year.

However, through all this, defensive stocks such as property, cash and bonds continue to yield positive returns.

InTech senior consultant Andrew Korbel said despite this positive contribution from de-fensive stocks, the median fund return was still around -3.3 per cent.

“This has been the worst monthly return for growth funds since the days of the Russian debt crisis in August 1998,” he said. “The three-month return from hedged international shares of -18.6 per cent was the worst since September 1990.”

ANZ chief economist Saul Eslake put the decline in the markets around the world in context earlier this week in his December quarterly economic outlook.

He said world markets have fallen by 42 per cent since peaking in April 2000.

“$US14 trillion of the wealth that notionally existed at that time – an amount equivalent to over 40 per cent of the annual output of the world economy – has since been erased,” Mr Eslake said.

“This represents the largest loss of wealth since World War II.”

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