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On this page

1. TL;DR

  • 1. TL;DR
  • 2. Key Findings
  • 3. Macro / Sector Context
  • 4. Data & Evidence
  • 5. Investment Implications
  • 6. Primary Risks & Assumptions

On this page

  • 1. TL;DR
  • 2. Key Findings
  • 3. Macro / Sector Context
  • 4. Data & Evidence
  • 5. Investment Implications
  • 6. Primary Risks & Assumptions
Report/March 15, 2026/3 min read/ubs.com

Global Investment Returns Yearbook 2026 | UBS

Source

1. TL;DR

  • Equities remain the definitive long-term wealth creator, significantly outperforming bonds and bills since 1900, though investors must now navigate record-high US market concentration, evolving industry mixes, and the nuanced, often overstated, role of gold as an inflation hedge.

2. Key Findings

  1. US equity market share rose from 15% in 1899 to 62% by 2026, representing unparalleled global dominance (p. 5).
  2. 70% of current US market value resides in industries that were non-existent or negligible in 1900 (p. 6).
  3. Equities outperformed all other asset classes in every country with a continuous 126-year history (p. 7).
  4. Developed markets (8.5% p.a.) significantly outperformed emerging markets (6.9% p.a.) over the long haul (p. 8). EM outperformed since 1960. (p.8, Figure 17)
  5. Real returns for stocks and bonds are historically highest during periods of low inflation and high growth (p. 9).
  6. Momentum remains the most robust style factor, yielding a 7.7% annual premium in the US since 1900 (p. 14).

References

  1. Original source (ubs.com)

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Reading

Published
March 15, 2026
Read time
3 min read
Progress0%
  • Currency exposure materially increases risk - FX fluctuations add roughly 6 percentage points to total portfolio volatility. (p.13, Figure 36)

  • 3. Macro / Sector Context

    • Concentration Risk: US equity concentration is at its highest level in over a century, making geographic diversification more difficult but statistically more essential (p. 5).

    • Structural economic shifts: The global economy and equity markets have radically rebalanced since 1900, with the US becoming dominant in capital markets despite a smaller share of global GDP. (p.5)

    • Industry disruption is constant: About 70% of today’s US companies operate in industries that barely existed in 1900, illustrating persistent technological turnover. (p.6)

    • The "Railroad Paradox": Similar to modern tech, railroads dominated the 1900s; however, declining industries often outperform "new" industries due to valuation resets (p. 6).

    • Inflation regimes matter for real returns: Real asset performance is stronger during low-inflation, high-growth environments, challenging the view that equities hedge inflation reliably. (p.9)

    • Economic vs. Geopolitical Risk: Fundamental economic shifts (recessions, inflation) impact returns far more significantly than short-term "geopolitical noise" (p. 11).

    • Diversification Limits: While a 60/40 split reduces drawdowns, increasing correlations between equities and bonds threaten traditional "safe haven" protections (p. 12).


    4. Data & Evidence

    • Compounding Power: $1 invested in US equities in 1900 grew to $3,296 in real (inflation-adjusted) terms by end-2025, a 6.6% annualized return (Exhibit 12, p. 7).
    • Gold’s role as an inflation hedge is nuanced: Gold failed to hedge inflation in 46% of high-inflation years since 1900, rising only 1.3% p.a. in real terms (p. 10).
    • Drawdown Mitigation: A 60/40 blend has never declined more than 50% in real terms, whereas equities and bonds have individually seen drops exceeding 70% (p. 12).

    5. Investment Implications

    • Maintain Equity Overweight: Equities are the only asset class to consistently beat inflation by a wide margin (6.6% real vs 0.5% for cash bills) (p. 7).
    • Strategic Style Tilts: Investors seeking alpha should favor Momentum and Value factors, provided they can withstand decade-long periods of underperformance (p. 14).
    • Systematic Hedging: Currency hedging adds value by reducing volatility by approximately 6 percentage points for international bond and equity portfolios (p. 13).

    6. Primary Risks & Assumptions

    • Survivorship Bias: The conclusions rely on 35 "surviving" markets; total-failure markets (like Russia/China in early 1900s) are largely excluded (p. 4).
    • US Exceptionalism: Results assume the US will maintain its 62% global dominance, which is historically an extreme outlier (p. 5).
    • Inflation Regime Change: Long-term returns may fail to reach historical averages if the global economy enters a permanent high-inflation/low-growth cycle (p. 9).
    • Correlation Convergence: The assumption that bonds protect against equity crashes is weakened by rising asset correlations during systemic shocks (p. 12).
    • Factor Cyclicality: Style factors (Value, Size, Momentum) show negative premiums in approximately 22% of all country-decades (p. 14).

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