Equities backed by historical track record of long-term performance

Yasmine Raso

Senior Journalist, Financial Newswire

30 January 2025

New market commentary from specialist investment manager, Datt Capital, has highlighted the not-to-be-doubted opportunities for long-term investors that lie within listed equities.

Emanuel Datt, Chief Investment Officer at the long-only boutique manager, said several instances of research corroborate the status of equities as the “cornerstone of wealth creation”, given their ability to capitalise on economic growth and corporate profitability to benefit long-term investors.

“Listed equities continue to stand out as the most consistent way to achieve long-term, inflation-beating returns,” Datt said.

“Numerous studies have consistently identified equities as the best-performing asset class over extended periods, despite their short-term volatility compared to perceived ‘safer’ alternatives like bonds or cash.

“The fundamental goal for investors is to achieve a positive real rate of return—growth above inflation. Failure to do so risks financial downward mobility. Equities have historically outpaced inflation significantly, preserving and growing investors’ purchasing power.”

Datt pointed to a study published by UK-based investment experts and professionals Elroy Dimson, Paul Marsh, and Mike Staunton in 2003 that analysed global investment returns from 1900 to the then present, which found that equities returned an annual five per cent globally – much higher compared to bonds (two per cent) and bills (0.8 per cent).

Similarly on the local front, research conducted by the Australian Securities Exchange (ASX) and Russell Investments suggested equities had delivered an average annual return of 9.6 per cent in the last three decades, once again beating residential property (6.8 per cent), fixed income (6.2 per cent) and cash (4.2 per cent).

“Australia, with its strong rule of law and strong economy, remains one of the most attractive markets for long-term growth,” Datt said.

“While volatility is inevitable, high-quality assets with long-term scarcity offer significant value. The Australian resource sector will remain a strong investment thematic for us as it continues to offer a blend of inefficiency-driven alpha potential, global demand alignment and natural hedging benefits.

“The power of equities lies in the capacity of this asset class to protect and enhance wealth over time, making this indispensable for securing a prosperous financial future.”