by Dejan Pekic
Asset Class Returns Annual Update
Posted by Dejan Pekic
The numbers are in for asset class performance in 2025, and once again, growth assets are the clear winner. Australian and international shares, and Australian property, continue to outperform cash and fixed interest savings.
For the calendar year ending 31 December 2025, international shares were the best-performing asset, with a return of 12.5%. For the first time in three years, Australian shares placed second, with a return of 10.3%, outpacing Australian property at 9.7%. Lagging behind were cash (3.8%) and fixed interest (7.9% Australian; 6.9% international).
The figures continue the trend of the past 45 years. Between 1981 and 2025, international shares have dominated asset returns on 15 occasions. Australian shares and property have been at the forefront ten times each, with cash providing optimum returns just twice, in 1994 and 2020.
While property investors did see interest rate cuts last year, the CPI index remained at 3.1%, and there is still some hesitancy around the property market. That said, returns across Australian shares and property remain comparable.
A look at asset performance since 1981 is a study in market volatility. While cash returns year to year fluctuated by a maximum of 18.8%, international share returns ranged from minus 26.9% in 2002 to 72.2% in 1985. What is also apparent is that, despite highly volatile markets, growth assets tend upwards over the long term. Had you invested $1,000 in Australian fixed interest in 1984, your return today would be $20,766. Investing it in the international share market would have garnered you $84,093.
Clearly, market cycles can teach us a lot about patience. For sustainable wealth management, we always recommend holistic financial advice, including financial planning tailored to your needs, financial situation and long-term goals.
Please click for the full asset return table.
*Please note that the numbers for 2025 do not reflect the opportunity to buy low and add to an investment holding when an asset class is out of favour, which in turn accelerates the rate of return well above the index performance.
WARNING: Past performance is no guarantee of future performance, and these index return figures do not reflect the ability of top professional investment management teams to outperform their respective index/benchmark.
The information in this article is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider whether the information is appropriate for you and seek professional advice before making any financial decisions.
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