Commodities and direct property best asset classes of 2022

Oksana Patron

13 February 2023

There were only three asset classes which were in the black in 2022, which was deemed as the worst annual period in the last 20 years for many asset classes, according to asset consultancy Atchison.

This included commodities, direct property and cash which returned last year 17%, 11% and 1%, respectively. Additionally, direct property was the best performer from all asset classes over the past 20 years and returned an average 10.2% between 2003-22, overtaking Aussie equities at 8.9%.

By contrast, all other 12 asset classes were last year in the red with G-REITs at -24%, hedged international equities at -22% and A-REITs at -20%.

However, the firm warned investors not to chase ‘the commodity rainbow’ as this asset class was binary in nature, recording periods at the very top of the table typically followed by periods at the very bottom.

“Over the 20 years, commodities, which have topped the poll six times – A-REITs and emerging markets share second place with three apiece – have also come last in seven of the 20 years,” Atchison principal, Kevin Toohey, cautioned investors.

Other interesting trends from the research included:

• emerging market equities (unhedged) have underperformed developed market equities (unhedged) for the past five successive years. This contrasts sharply with the first five years (2003-07) when emerging markets outperformed developed market equities (hedged and unhedged) four years out of five. In two of the five years emerging markets headed the list.
• of the seven asset classes that have returned 7% or higher over the 20 years, four are equities, two are property (G-REITs and direct property) and one is fixed high yield credit.
• Three of the bottom five asset classes are debt, with three being government bonds. Cash comes in last at an average 3.5%.
• The research is a salient reminder of the pre-GFC boom. In two of the five years (2004 and 2005) all asset classes outperformed the CPI, in two years only two failed to outperform it, and in the other year only three asset classes fell short of the benchmark.