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2022 by the numbers

How did share markets around the world performed last year? And what investment lessons can we learn from 2022? Read on to find out.

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Volatility has been constant on global investment markets throughout this year.

It has largely been driven by fears over surging inflation, rising interest rates, energy price shocks, the likely prospect of recessions, and geopolitical events such as the Russia-Ukraine war.

And all of those factors, among others, have combined to fuel investor nervousness, sparking market sell-offs that have caused widespread falls in many asset prices.

But not every investment market in the world has suffered. Some have actually gained ground.

Furthermore, different asset classes, and sectors within asset classes, have outperformed others.

Which is a timely reminder, as we near the end of 2022, that diversification across different markets and across different types of assets can help to reduce volatility and deliver smoother returns over time.

It’s a point that we emphasise every year with the release of a chart showing the importance of diversification, which accompanies the widely used annual Vanguard Index Chart.

What’s clear from the diversification chart is that the best and worst-performing asset classes varies from one year to the next.

Not only that, sometimes the best-performing asset class in one year can be the worst-performing the next.

 

How have share markets performed?

 

There have been wide variations in the performance of different stock markets this year, for a whole range of reasons.

The Australian share market, measured by the All Ordinaries Index, has fallen around 6.5 per cent year-to-date.

However, while our share market has slipped this year, largely as a result of the same economic factors gripping other developed countries, still-strong prices for our major commodity exports have provided some relief.

In addition, investors in our market have continued to benefit from the strong dividend payouts from ASX-listed companies, which in the 2021-22 financial year totalled more than $42 billion.

Another tailwind has been the 8 per cent fall in the value of the Australian dollar against the US dollar, which has helped many commodities exporters because their exports are priced in US dollars.

By comparison with Australia’s 6.5 per cent market drop , the United States share market, using the S&P 500 Index as the benchmark, has fallen more than 17 per cent this year.

It has been heavily impacted by economic sentiment, particularly over interest rate hikes, but also by the revaluation of mainly its largest technology companies, which have been trading on high price-to-earnings ratios.

So, which share markets have been the best performers in 2022?

Continued strong economic growth in India (6.8 per cent in 2022) – and a return of foreign investors – have been the key drivers behind that country’s share market recording a gain of around 6 per cent.

The Indian market, measured by the BSE Sensex Index, has outpaced Brazil’s, which measured by the Bovespa Index has gained just over 3 per cent. Brazil, like Australia, is a major commodities exporter.

Coming in behind India this year has been the United Kingdom, which despite economic and political upheaval has largely held its ground by recording a slight loss of 1.0 per cent year-to-date.

A number of the companies in the UK’s FTSE 100 Index have recorded broad gains, with the energy and tobacco sectors being notable strong performers.

From there on, the world’s other major share markets have all recorded higher negative returns.

Standouts are China (which has fallen around 12 per cent due to COVID-related restrictions, U.S. trade and political tensions, and the global economic slowdown), and Switzerland, which is down almost 15 per cent (amid concerns over interest rate rises and higher bond yields).

The U.S. market, as indicated, has performed poorly on a broad level. Measured by the Dow Jones Industrial Average (the Dow Jones), which only tracks 30 selected U.S.-listed companies, it has fallen by 7.7 per cent.

 

Major stock indexes: Past year performance*

 

Country

Market Index

Year-to-date Performance %

India

BSE Sensex

5.7

Brazil

Bovespa

3.2

United Kingdom

FTSE 100

-1.0

Japan

Nikkei 225

-4.8

Australia

All Ordinaries

-6.5

France

CAC 40

-7.9

Germany

DAX

-11.0

China

Shanghai Composite

-12.0

Switzerland

Swiss Market

-14.9

United States

S&P 500

-17.4

 

Data as at 9 December 2022. Source: Markets data. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance.

 

How have bond markets performed?

 

Central banks have been forced to leap into action this year, raising official interest rates aggressively to tackle the highest levels of inflation in decades.

The Reserve Bank if Australia is among them, having raised rates eight times since May from a record low of 0.1 per cent to 3.1 per cent.

These rate hikes have seen the yields on new bond issues rise in tandem. At the same time, the trading prices of older bond issues have fallen because investors have been switching into new issues to capture more attractive yield returns.

Higher yields overall have resulted in many investors switching into fixed income securities to de-risk their portfolios from the more volatile conditions currently prevailing on share markets.

But one of the biggest dynamics playing out in the U.S. bond market right now is the inversion in the yield curve, where the yields (interest rates) on one and two-year fixed income securities are higher than those being paid on 10-year bonds.

As at 9 December, the yield on a 10-year Treasury bond was 3.47 per cent versus 4.62 per cent for one-year and 4.31 per cent for two-year fixed income securities (Treasury notes).

The yield on Australian government 10-year bonds on 9 December was 3.33 per cent.

An inverted yield curve can often be an indicator of a looming recession, because banks and other financial institutions are generally less willing to lend out money over longer periods at lower rates if they can achieve higher returns from short-term investments.

This can result in a reduction in overall economic investment, because many large-scale projects need access to longer-term funding to complete them. That, in turn, can reduce economic growth.

 

Economic and market outlook

 

Vanguard has just released its economic and market outlook global summary for 2023.

Our view is that investors considering portfolio changes in the face of a possible recession in Australia, and indeed other regions around the globe, should maintain a focus on the plan and objectives they have set.

Based on history, investors with a well-diversified portfolio and the mettle to stick to the plan and goals set in less turbulent times are often rewarded when the volatility ebbs.

 

 

 

 

Tony Kaye

Senior Personal Finance Writer

vanguard.com.au

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Retiring on your own terms is not always easy to achieve, however it is evident that those who plan for retirement are more likely to do so. Results also show that obtaining professional help during the pre-retirement years further improves the probability of attaining your retirement objectives.

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Investing your hard earned savings can be a complex task.  There are many issues such as levels of risk, market timing, asset classes, and your own goals, objectives and preferences that need to be considered. It can often seem a daunting task. At Wybenga Financial we have the expertise to assist you in taking control of your finances and making sure you are generating the wealth you need both now and in the future.

The first step is to create a plan. At Wybenga Financial we take great care in getting to know our clients and their future goals and objectives. We combine our knowledge of your personal goals together with an analysis of your current situation, to create a detailed, personalised plan that will help you meet your objectives. This plan will become your road map which outlines how we are going to meet your goals, whilst aligning all investment decisions to your specific risk tolerance.

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Tess Uncle

B.Sc, M.Com, CA, DipFP

Tess has over 22-years experience in Chartered Accounting Firms and in this time has had a broad range of experience in superannuation, taxation, business services, and financial strategy.

Over the last seven-years, Tess has turned her attention to Financial Planning, earning a Diploma of Financial Planning in 2015 and leading the newly established financial division of the Wybenga Group as a director of Wybenga Financial.

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As a woman in a male dominated field, Tess is active in promoting gender equality in the industry through various programs and mentoring opportunities.

Using her depth of knowledge and experience in tax and accounting Tess is able to demonstrate a level of competence that is unique in the Financial Planning sector.

  • 2001 – Commenced employment with Wybenga & Partners and part-time accountancy studies
  • 2004 – Graduated Masters of Commerce from the University of New South Wales
  • 2005 – Admitted as an Associate Member of the Institute of Chartered Accountants Australia
  • 2007 – Promoted to Manager at Wybenga & Partners
  • 2012 – Appointed as Associate Director
  • 2015 – Awarded a Diploma of Financial Planning
  • 2016 – Appointed as Partner of Wybenga Group and Director of Wybenga Financial

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Adam Roberts

B.Bus, B.Sc, CA, DipFP

Adam has over 18-years experience in Chartered Accounting Firms and in this time has had a broad range of experience in superannuation, taxation, business services, and financial strategy.

Over the last seven-years, Adam has turned his attention to Financial Planning, earning a Diploma of Financial Planning in 2015 and leading the newly established financial division of the Wybenga Group as a director of Wybenga Financial.

Adam’s mission is to bring the ethics and integrity of his Chartered Accounting background to the area of wealth management.

Combining traditional accounting and financial services has been a welcome move for Adam, allowing him to operate and advise in the financial sector that has been a long time personal passion.

Using his depth of knowledge and experience in tax and accounting Adam is able to demonstrate a level of competence that is unique in the Financial Planning sector.

  • 2005 – Graduated Bachelor of Science from the University of Western Sydney
  • 2005 – Commenced employment with Wybenga & Partners and part-time accountancy studies
  • 2007 – Graduated Bachelor of Business from the University of Western Sydney
  • 2010 – Admitted as an Associate Member of the Institute of Chartered Accountants Australia
  • 2010 – Promoted to Manager at Wybenga & Partners
  • 2012 – Appointed as Associate Director
  • 2015 – Awarded a Diploma of Financial Planning
  • 2016 – Appointed as Partner of Wybenga Group and Director of Wybenga Financial

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What is an Advisory Cadetship?
An Advisory Cadetship enables you to commence your career whilst attaining the necessary university qualifications by studying part-time.

How does it work?
Generally, our cadets complete a relevant business or accounting degree at the University of New South Wales, the University of Technology Sydney, Macquarie University, or the University of Western Sydney.

The Firm provides 3-hours paid study leave per week to attend university. This can either be taken at the one time or broken between days depending on the individual’s requirements. In addition, the Firm provides paid study leave for both mid-semester and end-of-year exams.

We take the work life balance very seriously at Wybenga Financial and our cadets are encouraged to have a fulfilling life outside the office. A typical day will have you arriving at the office at around 8.30am with most days concluding at 5.30pm.

What are the benefits of an Advisory Cadetship with Wybenga Financial?
Our cadets benefit from the following:

  • Career path – on completion of their degree our cadets have significant practical experience which will assist them in advancing their careers
  • Work helps your studies – by working full-time our cadets are able to apply their practical knowledge in the university subjects
  • Camaraderie with other cadets – the Firm has a number of cadets at various stages of their career
  • Mentoring – cadets are paired with a senior staff member who oversees their progress and training both at work and with their studies
  • Communication and feedback – the Firm has an open door policy which enables all cadets to interact with all members of staff including Directors
  • Culture – the Firm promotes a friendly social culture with a number of functions throughout the year
  • Modern environment – including ‘socialising’ areas such as pool table and break out area
  • Training – ongoing support and technical training. We also provide internal and external training on a monthly basis
  • Remuneration – working full-time provides a market salary and independence with salaries being reviewed every 6-months

What happens when I complete my degree?
The completion of your degree is the first step of what we hope to be a long and successful career with us. The next step is the commencement of a Diploma of Financial Planning followed by completing the requirements to become a Certified Financial Planner (CFP).

There are always progression opportunities for the right cadets and we are dedicated to the long term development of our staff.

Who should apply?
Current Year 12 students or first/second year University Students who:

  • want to commence their career in financial advisory;
  • are due to commence or are currently completing a part-time business or commerce degree at university with an advisory major;
  • want to gain valuable hands-on experience while completing their qualifications;
  • are looking for a friendly working environment;
  • are team players who display initiative;
  • have a commitment to self-development;
  • possess excellent personal presentation and communication skills; and
  • are motivated and mature minded.

How do I apply for an Advisory Cadetship?
To apply for a Cadetship position at Wybenga Financial send us your details. Please also include in your covering letter why you wish to do a cadetship, include relevant qualities you possess, main interests / achievements, and any previous employment.

Interested candidates should initially forward a resume/covering letter of no more than 3-pages. Please provide full details of contact information (telephone or e-mail).

What if I have more questions?
For further information about our Cadetship program, please send your enquiry to .