Wednesday, June 27, 2012

What Country has the Highest Stock Market Returns Since 1900? Australia and Canada Near the top of the List. Here is a Way to Invest.

Banking giant Credit-Suisse highlights Australia as the stock market with the highest real return over the last 112 years. The country, blessed with vast amounts of natural resources and fantastic weather, boasts an average annual real rate of return of 7.2%. Over the same period, Canadian stocks have returned 5.7% per year, which is also above the world-wide average of global stocks. The global average return for stocks since 1900 has been 5.4% per year.

The Australian Stock Market, or ASX, is now the sixth largest equities market in the world, and the nation boasts one of the world's highest rates of "economic freedom," according to the Heritage Foundation. Currently, half of the Australian stock market is composed of banks and mining companies, which is very similar to the Canadian stock market, with the exception of our preponderance of oil and gas stocks. Big names include companies like BHP Billiton and the Commonwealth Bank of Australia.

With Australian Debt to GDP levels for 2012 at around 23%, the country is also in excellent financial shape. So what can the Intelligent Investor do with this information? Focus some of your international exposure on Australia. 10% of a portfolio could be invested in a basket of Australian stocks by buying a exchange traded fund (ETF). One such ETF trades under the ticker (EWA) on the NYSE. Over the last year the iShares MSCI Australia Index Fund has declined by about 13% and represents a good value at today's level.

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