KARACHI: Save for the year 2008, which was a nightmare for the investors in both oil and stocks as each plummeted by 58pc, equities outperformed returns on other asset class in the past 10 years.

Average return from stocks stands at 25pc during the decade, including a return of 27pc in the previous year.

Oil (US benchmark WTI) could have followed as the second best investment but for the dip in prices by 42pc in 2014. Overall, oil investors received a return of 12pc in the 10-year period.

In uncertain times, risk adverse investors usually seek safety of the fixed income or tangible assets. Gold, widely regarded to be investment of choice for the long term, provided returns between 12pc in 2005 and 42pc in 2009, giving an average return of 18pc in the last decade.

But gold too buckled under pressure of supply over demand to end up with negative returns of 20pc in 2013 and 5pc in 2014. As for T-bills, the 10-year average return was 10pc, twice the miserly return of 5pc given out by banks in the same period.

Yet, investment in T-bills is preferred mostly by banks, financial institutions and high-net-worth individuals. For all the efforts of the regulators, small saver would not touch T-bills, which to them is still shrouded in mystery.

But investors do sometimes fall in love with the dollar; those who did it in 2007 were lucky for having received 22pc in return. But as the rupee overpowered the dollar for the first time in 10 years in 2014, investors in the greenback stood with negative returns of 4pc. Over the previous 10 years, average yearly return on the dollar works out at 6pc.

Analysts at brokerage Topline Securities mentioned in a report that the dollar’s depreciation against the rupee in 2014 could be attributed to significant increase in foreign exchange reserves, proceeds from privatisation; auction of 3G and 4G spectrum licences and Eurobond issue, which resulted in ample supply of dollar.

Return on property is as difficult to judge as it is to work out its real value. In a report, analysts at Topline Securities mention: “According to a survey conducted by Zameen.com (an online property portal), real estate investment in selective localities yielded a return of 25pc in 2014”.

Topline mentions that gold prices dropped by 5pc last year due to rapidly changing geopolitical and economic scenarios. “Investors use gold as a hedge against inflation, however, low inflation rates and expected hike in interest rates by US Fed in 2015 have kept prices under pressure,” the brokerage stated.

Since inflation during 2014 clocked in at 7pc, the inflation-adjusted return from stocks stood at 20pc. Over the 10 years, inflation-adjusted returns on stocks worked out at 14pc.

Topline calculated that the 20pc return on equities represented outperformance over the inflation-adjusted returns on Special Saving Certificates (SSC) at 5pc and on T-bills at 3pc in 2014.

Published in Dawn January 11th , 2014

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