TOP SHARES FROM THE PAST 20 YEARS

IT WAS the year of the Sydney Olympics, a potential Y2K bug and the Dotcom crash.

But 2000 was also an opportunity for savvy – and lucky – investors to make massive sharemarket profits. An analysis by News Corp and investment management group Ausbil shows more than onethird of our biggest stocks have at least doubled investors’ money since the turn of the century – and at least 10 per cent of them have delivered returns above 1000 per cent. It makes this month’s 12 per cent sharemarket rise just a small blip on the radar.

The top 20 shares of the past 20 years have some common traits, say investment specialists, but they warn trying to pick the big winners of the next 20 years is tough amid massive global transformation.

“Twelve months is a long time in this market,” said Ausbil Investment Management founder Paul Xiradis.

Ausbil examined ASX 300 companies for share price growth and dividends for the 20 years to November 2020, and found a clear standout: Fortescue Metals Group, which was started by Andrew “Twiggy” Forrest as a small mineral explorer and grew into a global iron ore giant.

It has delivered shareholders total returns of more than 330,000 per cent, which equates to 50 per cent a year.

“There were an incredible amount of hurdles it had to overcome to get there, but to the credit of Andrew Forrest he had the vision,” Mr Xiradis said

Billionaire Andrew Forrest’s company rose from tiny explorer to iron ore mining giant, with huge operations in Western Australia’s Pilbara region.

Total return

Annualised return

“Now it’s one of the highest-paying dividend stocks in the market.”

Number two, REA Group, has delivered total returns above 70,000 per cent by building online property giant realestate.com.au and expanding overseas. Mr Xiradis said REA had “first mover advantage” in property and the relatively low cost of scaling up online platforms, making for great profit growth.

Number three stock, Data#3, had ridden the cloud technology wave, he said, while health care giant Ramsay Health Care was number four. “They put health first and business second, and that’s been a very strong formula over the years,” Mr Xiradis said.

“They have managed to roll that out globally.”

Mr Xiradis said finding future winners started with spotting companies that were “clear leaders in their field” and had a long-term growth profile.

“Having a diversified portfolio is wise … some of the big brand names of 20 years ago haven’t performed.”

AMP and Telstra are among the weakest big names since 2000. AMP’S total return is negative 32 per cent.

Only 123 of the ASX 300 companies from 2000 remain there today. Many were merged, taken over, collapsed or replaced by newcomers such as Afterpay, Zipco, JB Hi Fi and SEEK.

Afterpay launched on the ASX in 2017 and has enjoyed a 3000 per centplus share price rise. Tech stock Appen is up more than 5000 per cent since listing in 2015, while some resources companies have enjoyed huge gains.

However, they still lag 20-year veterans and sharemarket stayers such as Fortescue and REA Group.

Investment advice firm Baker Young’s managed portfolio analyst, Toby Grimm ( pictured left), said Fortescue was an example of taking big risks

to get big rewards. “Fortescue went from a minnow nipping at the heels of Rio and BHP to a bona fide giant in its own right,” he said.

Mr Grimm said rapid advances in technology meant “entire sectors could fall by the wayside” in the future.

“You can’t say that any company is going to be a winner in 20 years’ time,” he said.

Mr Grimm said successful investment most of the time “means doing nothing” and the best way to manage risk was to diversify across sectors and stocks. “The tendency is to overthink and overtrade,” he said.

Mr Grimm said the Fortescues of the future would emerge from ideas and advances “that people haven’t yet thought about”.

“Technologies that will turn the operation of business upside down have yet to be invented, so how can we know who will invent them?”

Bell Direct market analyst alyst Jessica Amir said investors should think about technology and consumer trends, and seek companies with strong ng management and momentum in profit rofit growth.

“Are their earnings growing? wing? What drives share price growth is s earnings growth,” she said.

Ms Amir ( said commodity mmodity stocks such as mining companies should continue to do well as the world’s economy recovered d from the COVID slump, and investors should consider “the clean ean and green economy”.

She said educating yourself ourself was essential, with free help available online through online stockbrokers and other providers, or people could seek ek professional advice.

“We are seeing an emergence rgence of cowboys saying ‘ buy this stock, buy that stock’,” Ms Amir said.