Barclays Equity Gilt Study Sees Low-Risk, Low Return Environment for
58^th edition argues that equities remain the most promising option for
investors seeking positive, inflation-adjusted returns
LONDON & NEW YORK -- February 21, 2013
The ‘tail risks’ associated with the 2008-09 financial collapse have largely
receded, resulting in a low-risk, low-return environment for investors who
face far more challenging valuations and diminished prospective investment
returns, according to the 58^th edition of the Barclays Equity Gilt Study.
Furthermore, the investment environment will be driven by two transitions in
the next five years – the eventual normalisation of monetary conditions and
China’s transition from economic ‘miracle’ to normal development – which could
put downward pressure on equity returns.
Larry Kantor, Head of Research at Barclays, said: “With lower volatility
having already been priced in by the nearly 20% rise in global equity prices
since the beginning of last year, equity returns over the next five years are
expected to be lower – in the 3-4% range – than we had been anticipating
previously and well below historic norms. Even so, returns on equities are
likely to easily beat those on cash and bonds, both of which we expect to be
negative in inflation-adjusted terms.”
The Equity Gilt Study also examines the structural demand for safe haven
assets and concludes that it will remain high, thus keeping bond yields low
relative to historic norms. Diminishing demand for safe havens associated with
slower official reserve accumulation will likely be offset by demand from
banks adjusting to new regulations as well as from private investors in
countries with aging populations.
The study dedicates a chapter to China and contends that although China’s
economy faces many risks, it is unlikely to collapse, and in fact can be
expected to move toward ‘high income’ status over the next decade. However,
the report notes that it may continue to look different from Western advanced
Finally, the Equity Gilt Study focuses on the risks associated with the
extraordinary loose monetary policies of the major central banks since the
onset of the financial crisis. It concludes that the authorities will have to
act deftly to ensure these risks, which include high inflation, asset bubbles
and reduced productivity, are contained.
About the Barclays Equity Gilt Study
The Equity Gilt Study has been published annually since 1956, providing data,
analysis and commentary on long-term asset returns in the UK and US. The UK
data base goes back to 1899, while the US data – provided by the Centre for
Research in Security Prices at the University of Chicago – begins in 1925.
This publication is unique not only for its longevity, but also for its focus
on medium- and long-term market trends.
For information on obtaining a hard copy of the Equity Gilt Study, please
contact Barclays Corporate Communications.
Barclays moves, lends, invests and protects money for customers and clients
worldwide. With over 300 years of history and expertise in banking, we operate
in over 50 countries and employ over 140,000 people.
We provide large corporate, government and institutional clients with a full
spectrum of solutions to their strategic advisory, financing and risk
management needs. Our clients also benefit from access to the breadth of
expertise across Barclays. We’re one of the largest financial services
providers in the world, and are also engaged in retail banking, credit cards,
corporate banking, and wealth and investment management.
Barclays offers premier investment banking products and services to its
clients through Barclays Bank PLC.
Aurelie Leonard, +44 (0) 207 773 2800
Erica Chase, 212-412-6830
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