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Barclays Capital Equity Gilt Study
Published on 19th February, 2010 at 15:00 by Eric Mowinski.
Barclays report show a poor decade for equities.
The 55th edition of the Equity Gilt Study from Barclays Capital was published last week. The Study, which incorporates UK and US investment data going back to 1900, is widely used to provide statistics about the wisdom (or otherwise) of long-term equity investment.
A summary table of real (ie net of inflation) annual gross returns to the end of 2009 is shown below:
Period 1 year 5 years 10 years
UK Equities 25.9 3.3 -1.2
Gilts -3.3 2.1 2.6
£ Corporate Bonds 15.8 0 2.9
Index Linked Gilts 3.1 1.4 1.9
Cash Deposits -2.1 0 0.8
Barclays do not include commercial property in their survey, but the corresponding figures based on Investment Property Databank (IPD) statistics would be 1 year: 1.0%, 5 years; -1.0%; 10 years: 3.5% and 20 years: 3.6%.
The 2010 Study underlines what a poor decade the Noughties was for UK equity investment. It did not help that the decade started at the very peak of the UK market, with the FTSE 100 at 6930.2 (about 30% above current levels) and the broader FTSE All-Share Index at 3242.06 (about 20% above current levels). However, there were two worse-performing decades in the 20th century:
1909-1919 which, thanks to World War I, gave average annual real return of -3.8% ; and 1969-1979 when the first oil price shock, among other events, left inflation averaging 13.1% pa over the decade and average annual real returns were -2.3%.
Another way of looking at the 1999-2009 experience is to note that using all 107 years of their data, Barclays calculated that over 10 year periods, UK equities outperformed cash (Treasury Bills in this instance) 91% of the time. That puts 1999-2009 firmly in the bottom decile.
Posted under the following tags: barclays, equities, investments.
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