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Asset returns and the investment choices of New Zealanders

Elizabeth Watson

This article introduces a new set of estimates of gross nominal returns since 1989 for a broad range of asset classes relevant to New Zealand investors. Risk and return characteristics of the assets are presented, and aggregate trends are discussed. However, many other factors may be relevant to the investment choices of New Zealanders. Investors are interested in realised rather than gross returns, directly determined by a range of factors including tax treatment and the impact of leverage. Attitudes to risk are a key determinant of investor behaviour, given that future returns are highly uncertain – providing grounds for portfolio diversification. Personal circumstances are also important and vary considerably between individuals.