For what it’s worth: why what you pay for an investment is a key driver of
its return…and how do valuations look now?
Dr Shane Oliver, Head of Investment Strategy & Chief Economist insights
Starting point valuations – like yields and price to earnings ratios – are key drivers of medium-term investment returns.
For growth assets it’s often more complicated, with the level of interest rates playing a big role.
At present, valuation starting points for term deposits and bonds have improved. For shares they suggest constrained return potential from US shares but are better for Australia.
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