Mercer Periodic Table of Annual Investment Returns for Australian Investors 2012 To 2021

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One of the main factors that is important for success with investing in equities is the art of diversification and having patience. Diversification can be achieved in many ways such as spreading over one’s assets over different asset classes, countries, regions, sectors, etc. The benefits of this strategy was widely made popular with the Callan Periodic Table of Investment Returns. Many others have replicated that design and created periodic table of investment returns charts. I came across the following Periodic Table of Annual Investment Returns published by Mercer for the Australian Equity Market. This chart also clearly shows the advantages of diversification for Australian investors.

Mercer Periodic Table of Annual Investment Returns for Australian Investors 2012 To 2021:

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Note: Returns quoted are based on Australian Dollars

Source: Mercer

In 2021, Australian stocks as represented by the S&P/ASX 200 index returned 17.54%. But International Equities  (Hedged) performed even better and yielded 23.88%. Aussie Small Caps and Direct Property had lower returns as well.

Below are some findings from the Mercer report:

“Demystifying the Mosaic

Looking across 2021 and the past decade, a number of observations can be made from the Periodic Table:

  • 13 of the 17 asset classes generated a positive return last year – bettering 2020 (12 positive returns) but not as remarkable as the 100% outcome achieved in 2019.
  • Leading the way in 2021 was Global Listed Property (H) with a stellar return of 29.8%. Amidst a busy year property markets recovered. Investors sought out alternative inflation linked sources of return and the asset class delivered handsomely.
  • Global Equity (UH) featured in second place in 2021 (+29.6%).  The rally for the asset class continued from +4.5% in the previous year as confidence in risky assets returned post pandemic.
  • International Equity (H) was another asset class that produced impressive returns in 2021, up +23.3%. Meanwhile, in a notable divergence occurred for Emerging Market Equities UH (+3.4%) and Emerging Market debt, which were far softer (-3.2%) with Turkey and China amongst the main soft spots with economic and political developments.
  • Australian Equity (+17.5%) lagged other developed markets like the US which had more growth/tech exposure, as Australia relies more on traditional industries.
  • Fixed income in general faced a difficult year end as inflation expectations increased, with global sovereign bonds returning -2.9% and Australian fixed income returning -3.2%.”

Source: Mercer

An interactive version of the above chart and other valuable charts can be found at their site here.

Related ETF:

  •  iShares MSCI Australia ETF(EWA)

Disclosure: No positions

Some Russian ADRs Can Be Converted To Ordinary Shares Now

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BNY Mellon, the depository for many Russian ADRs and other depository programs has offered to exchange ADRs for ordinary shares that trade on the Moscow Stock Exchange for a select group of companies. With this program, ADR holders can convert their ADRs to ordinary shares. Trading of all companies started on the local exchange this week.  Below is the announcement at BNY Mellon’s site:

Notice is hereby given by BNY Mellon, as depositary, that cancellation transactions will be allowed for the following programs, with certain conditions, effective March 30, 2022. First, the cancelling party will have to attest to there being no change of beneficial ownership from the beneficial holder of the DRs to the beneficial holder that ultimately receives the ordinary shares. We have an attestation (link) form that we will require from the cancelling party. Completed attestations should be emailed to: [email protected]. *Note, parties cancelling through Euroclear will be asked to attest electronically and will not be required to submit the physical attestation. In addition, we will require that the cancellation fee for transactions of 500,000 DRs or more be paid in advance of our delivery of the ordinary shares in Russia via SPO or fedwire. Wire instructions can be obtained from [email protected].

Source: CONDITIONAL BOOKS OPEN NOTICE, BNY Mellon

The following ADRs can be exchanged under this program:

Source: BNY Mellon

Some of the major depository programs that can be converted include:

Some useful questions and answers:

1.Is there any fees for the conversion?

Yes. There is a cancellation charged by BNY Mellon. For the exact amount reach out to them

2.Will BNY Mellon directly work with me to do this conversion?

Nope. You have to ask you broker to send the details to BNY Mellon. The depository will not work with retail investors for this process.

3.When this offer become effective?

This offer became effective March 30th, 2022

4.Is any attestation required for the ADR cancellation?

Yes. The ADR owner must attest that they would continue be the owner of the securities after the conversion. The following form must be submitted:

Revised Cancellation Attestation Form (4/28/22):

You can download the pdf form here.

Update (4/11/22):

Citi Depositary Receipt Services – Books Open Notice:

Lukoil ADR(LUKOY) holders can reach out to Citi for the conversion to ordinary shares.

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Source: Citi

Disclosure: No positions

Related articles:

ADR Conversion to Ordinary Shares – articles:

An Update on Russian ADRs

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The Russian stock market opened for partial trading last week after being closed for a month. This week all companies on the Moscow Stock Exchange started trading. However Russian stocks are still suspended on the US markets and the London Stock Exchange. Some investors may be eagerly waiting for trading of Russian ADRs to resume. To that end, below is an update from the depository BNY Mellon.

Note: Some Russian ADRs Can Be Converted To Ordinary Shares Now

BNY Mellon has appointed Austria-based Raiffeisen Bank International AG as the custodian for most Russian depository programs according to a notice posted on their site:

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Source: BNY Mellon

Conditional Books Open Notice:

Source: BNY Mellon

U.S. Inflation – Past, Present and Future: Infographic

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I came across the below infographic on US inflation since the 1960s. Last year when inflation started creeping up the Fed said repeatedly it was only “transitory”. Now it has become permanent and they are unable to get it under control. Raising interest rates a little bit is not going to help. With sky high gas prices it may not be shock if we end up with a recession.

Click to enlarge

Source: Visual Capitalist

The Top 10 Companies in the S&P 500 Index From 1980 To Current

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One of the popular myths in the field of equity investing is that large companies are too big to fail. Nothing could be farther from the truth. Over and over again this has proven to be correct. For instance, during the dot com boom peak in 2000, tech giants Cisco(CSCO) and Intel (INTC) were in the top 10. But by 2005, they were gone from the list.

Similarly GE(GE) was the top firm in 2005. By 2020 it got kicked out as well.

The Top 10 firms in the S&P 500 continues to change over the years from 1980 as shown in the table below:

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Data Source: S&P Dow Jones, Spheria

Source: Size doesn’t matter when it comes to risk, Gino Rossi, Firstlinks

The key takeaway is that no firm is too big to fail and that today’s best would be tomorrow’s worst. So investors have to keep this mind and make portfolio allocations accordingly. It is never a good idea to put most of one’s assets in the top firms in the hope that nothing would uproot them.

Related ETF:

SPDR S&P 500 ETF Trust (SPY)

Disclosure: No Positions