The state of investment returns

Which investments have yielded the best rates of return over the last 100 years? Two recent studies reveal all.

Last week saw the publication of two annual studies covering the performance of a wide range of global equity markets since the beginning of the past century: the Barclays Capital Equity Gilt Study and the Credit Suisse Global Investment Returns Yearbook produced by Elroy Dimson, Paul Marsh and Mike Staunton of the London Business School (LBS). These help put the short-term turbulence in stock and bond markets in perspective and highlight strategies that boost long-term returns.

Last year gilts rose by 15.8% in inflation-adjusted terms, while UK stocks slid by 7.8%, according to Barclays Capital. Stocks have had their worst decade since the stagflationary 1970s, returning just 1.2% a year between 2001 and 2011.

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