UBS presented today the 2024 edition of its Global Investment Returns Yearbook, which now celebrates its 25th anniversary. The Yearbook delves into several important themes relevant to investors.
Among these, it focuses on the continuously superior performance of equities over bonds, bills, and inflation across all 21 markets since 1900.
More specifically, the Yearbook underscores the dominant position of the US in the global equity market, constituting 60.5% of the world's investable equity market value, far surpassing other major economies like Japan, the UK, and Mainland China.
Furthermore, it reveals that the majority of asset returns have been generated during periods of easing interest rates, with notable differences in returns during easing versus hiking cycles.
It also observes that real exchange rate changes have largely mirrored relative inflation rates since 1900. The transition to a higher return environment is attributed to a recent increase in real interest rates, contrasting with the low returns of 2022.
Moreover, the Yearbook discusses the variability and potential future relevance of investment factors such as size, value, and momentum, alongside the historical premium offered by investment grade and high-yield corporate bonds over government bonds.
“The Global Investment Returns Yearbook is an authoritative guide to historic asset class performance, and it’s only by looking at the rise and fall of various asset classes over time that you can truly understand the importance of diversification and the full value of a disciplined asset allocation approach,” said Mark Haefele, Chief Investment Officer at UBS Global Wealth Management.
Paul Marsh, a professor at London Business School, said:
“As markets transition to more “normal” interest rates and levels of inflation, this is the time to reflect on what to expect for the future. The Yearbook provides the historical evidence and perspective needed to underpin future investment strategy.”