2022 has been a challenging year for investments. The global sharemarket has taken a beating – the benchmark S&P500 is down more than 13% year to date. The ASX200 is down 7% year to date. Cryptocurrencies are experiencing a “crypto winter” as major coins are down more than 50% year to date.
Given this background, many of our clients are asking – how can we make decent returns and not worry about our capital/money ?
We have found the below asset classes have helped our clients reduce the emotional volatility associated with investing in an uncertain and complex environment.
1. Australian corporate high grade bonds – ~6% payment per year until maturity.
Rising interest rates in Australia have presented investors with opportunities not seen in years. Companies such as Commonwealth Bank of Australia (CBA), Macquarie Bank and Australia and New Zealand Banking Group (ANZ) have issued 5 year bonds paying ~6% per year in recent weeks.
This type of asset is attractive as it provides certainty in capital as well as consistency of income.
2. Prime office buildings in Central Business Districts (CBDs)
Think of the best 3 office buildings in Sydney, Melbourne, Brisbane, Perth and Adelaide. Investors have the opportunity to co-own these prime office buildings. Tenants always sign a long lease (usually 8 years or more and rental growth is circa 3.5% per year).
Even the extreme shock of covid-19 affected these assets very little due to the long lease durations and limited land supply in CBDs.
3. High-quality industrial properties that serve busy cities.
High quality means that an industrial property is automated, located strategically (less than 50km from a major city) and is technologically enhanced. These assets:
- are located near key infrastructure – such as major motorways or ports.
- have adaptable site areas
- High occupancy rates & tenants with long lease
While the investment market in 2022 is highly volatile and uncertain, there are opportunities for investors as highlighted above. You can book an appointment with Stralis Wealth below, to discuss the above assets in more detail.
