The 2021 UK edition of our annual report on the history of financial markets provides context for the range of returns investors can expect from equities, bonds, and cash; reveals the importance of various components of equity returns; examines the evidence for equity mean reversion; and reviews the relationship between initial valuations and subsequent returns for equities and bonds.
Government bonds have sold off to start the year as central banks tighten policy in response to inflation pressures. The rise in yields this year may meet some resistance in the near-term, but likely has more room to run given the economic backdrop and policy trajectory. Of course, the war in Ukraine and its impact on the economy will be a key driver of rates for the duration of the conflict.
The 2021 US edition of our annual report on the history of financial markets provides context for the range of returns investors can expect from equities, bonds, and cash; reveals the importance of various components of equity returns; examines the evidence for equity mean reversion; and reviews the relationship between initial valuations and subsequent returns for equities and bonds.
Russia’s invasion of Ukraine sent shockwaves across the world, creating a tragic humanitarian and geopolitical crisis, and introducing new uncertainty to the global economy and financial markets. Investors also continue to grapple with ongoing inflationary risks, central bank policy changes, and COVID-19 developments.
Central banks across the globe are poised to raise policy rates in response to inflation concerns. By examining how US policy rates have impacted US risk assets historically, we consider how assets may react today. These tighter financial conditions may cap the upside potential for risk assets. Within equities and credit, the risks are particularly pronounced in growth stocks and investment-grade corporate bonds.
This publication presents manager performance for 37 asset classes and substrategies, showing the median, mean, and key percentiles of return. Relevant indexes for each asset class are also included to provide market context.
Most global assets experienced broad-based declines in January. Global equities suffered their worst month since March 2020; emerging markets held up better than developed counterparts but remain a significant laggard over the trailing 12-month period. Value and large caps outperformed growth and small-cap equivalents, respectively. Fixed income assets declined as nominal interest rates rose and…
The global economy continued its road to recovery in 2021, as the most severe economic impacts of the COVID-19 pandemic gradually receded. There were fresh waves of infection during the year, but the public health actions taken to counter them were less economically damaging. In the meantime, fiscal and monetary policy remained at extremely accommodative levels, supporting strong risk-asset performance.
Global capital markets remained volatile during fourth quarter 2021 but ended in strong positive territory for the quarter and year. While hedge funds generally produced positive absolute performance, many growth-oriented long/short equity managers experienced significant drawdowns during the quarter.
Risk assets surged in fourth quarter, capping off a year of impressive gains.