Global Investment Returns Yearbook 2024

Bridge and mountain

Key themes

Since 1900, equities have outperformed bonds, bills and inflation in all 21 markets for which the Yearbook has a continuous history.

Equities have dominated bonds, while bonds have outperformed treasury bills. The same held true for the rest of the 35 Yearbook markets with start dates after 1900.

The US market now accounts for a staggering 60.5% of total world investable equity market value, dominating Japan (ranked in second place at 6.2%), the UK (third at 3.7%) and China (2.8%).

The majority of long-run asset returns are earned during easing cycles. From 1914 to 2023, US markets were in a rising interest rate mode 45% of the time and in a falling mode 55% of the time. The annualized return on US stocks and bonds was 9.4% and 3.6% during easing cycles, compared with just 3.6% and -0.3% during hiking cycles. UK data since 1930 reveals a similar pattern.

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.
Mark Haefele, Chief Investment Officer, UBS Global Wealth Management

While currencies fluctuate considerably, since 1900, real exchange rate changes have largely reflected relative inflation rates.  Most currencies weakened against the US dollar, and only a couple (most notably the Swiss franc) proved perceptibly stronger.

Markets have transitioned from a low-return world to a higher return world thanks to a sharp increase in the real rate of interest and poor returns back in 2022. Long-run projected returns on stocks and bonds are now some two percentage points higher than two years ago.

Premiums from factors such as size, value and momentum have experienced long drawdowns. Factors will stay important in explaining returns, but it is unclear whether they will generate future premiums.

Based on long-run evidence from 1900 for the US and 1860 for the UK, investment grade corporate bonds have offered a significant credit risk premium over equivalent government bonds of around one percentage point per year. The premium from high-yield bonds is some two percentage points higher than this.

The re-emergence of inflation and associated central bank monetary response has meant an historical perspective has been crucial to navigate the investment landscape successfully. The Yearbook provides a rich framework for addressing contemporary issues through the lens of financial history, with this year’s focus chapter presenting long-run evidence on corporate bonds and the credit premium.

Investment returns yearbook report

About the Global Investment Returns Yearbook

The Global Investment Returns Yearbook, now in its 25th year, is an authoritative guide to historical long-run returns.

Over the years, the body of work assembled by Professor Paul Marsh and Dr. Mike Staunton of London Business School and Professor Elroy Dimson of Cambridge University on the Yearbook project has established the study as the definitive source for the analysis of the long-term performance of global financial assets.

Published for the first time this year by UBS, in conjunction with the London Business School, and previously by the Credit Suisse Research Institute, it covers all the main asset categories in 35 markets. Most of these markets, as well as the world index have 123 years of data since 1900.

This summary report contains extracts from the full 290-page UBS Global Investment Returns Yearbook 2024.