UBS Investment Bank and UBS Global Wealth Management’s chief investment office has released its “Global Investment Returns Yearbook 2026: Timeless lessons for today’s investment challenges,” drawing on historical data stretching back to 1900.

UBS Investment Bank and UBS Global Wealth Management chief investment office's Global Investment Returns Yearbook 2026 shows that equities have been the top-performing liquid asset since 1900.

The report, released today, highlights how equities have outperformed bonds. In real terms, after taking into account inflation, equities delivered returns of 6.6 per cent annually over the period 1900 to 2025, compared with 1.6 per cent for bonds.

The report was drawn up in partnership with Professor Paul Marsh and Dr Mike Staunton of the London Business School and Professor Elroy Dimson of Cambridge University, offering a record of real returns across equities, bonds, currencies and gold worldwide.

From a relatively balanced global equity market at the start of the 20th century, the US dominates global equity capitalisation, accounting for 62 per cent of total world equity market value, the report reveals. This reflects strong long-term equity returns and sustained equity issuance, even as the US share of global GDP has declined from mid-century peaks.

Meanwhile, developed markets have outperformed emerging markets over the long run, the same report shows. Since 1900, developed markets delivered higher annualised equity returns of 8.5 per cent than emerging markets at 6.9 per cent. However, emerging markets have outperformed over more recent periods, returning 10.9 per cent per annum from 1960 to 2025 compared with 9.6 per cent for developed markets. Similarly, emerging market bonds outperformed until the 1940s, when they plummeted. After that, emerging market bonds outperformed developed market bonds from 1950 to 2025, with the same finding being true for start dates of 1960 and 1980, though not 1970.

Inflation also has a key impact on long-term returns. The real returns from equities have beaten inflation, the report adds.

Gold’s role as an inflation hedge is nuanced. Gold delivered negative returns in 13 of the 28 years when inflation exceeded 3 per cent, but over the very long run it has preserved purchasing power, with the real dollar gold price rising 5.2-fold since 1900, equivalent to an annualised real return of 1.3 per cent. Gold has sometimes been effective as an equity market hedge, the report said.

It also shows that railroads, dominant in 1900, now less than 1 per cent of the US market, have still outperformed over the long run. Similarly, technology stocks – despite the dot.com collapse – delivered superior multi-decade returns relative to the broader US market. Economic risk has also historically outweighed geopolitical risk, the report reveals. While extreme geopolitical events have coincided with some of the worst market outcomes since 1900, most large peacetime equity drawdowns were triggered by economic rather than geopolitical factors. Investors should look beyond short-term geopolitical noise, the report states.

A problem with historical data showing one asset class beating or lagging another, however, is that for many investors in the past 100 years, there were decades of poor or meagre equity market returns, coupled with low bond yields. During the 1970s, to take one decade, bond market returns in parts of the developed world were poor, and those holding these as retirement cashflow generators would have been disappointed.

Volatility hedges

The UBS report said new work on currency hedging shows the benefits of reducing volatility. Currency risk on average added around 6 percentage points to total risk whether focusing on equities or bonds, although currency risk adds proportionally more to the risk of bond portfolios. This may explain the higher preponderance of hedging for fixed income portfolios.

Diversification is also becoming more challenging, but still works, the report adds. Market concentration and rising correlations have increased the difficulty of diversification, yet historical evidence shows that global diversification and balanced equity/bond portfolios have continued to reduce risk and drawdowns.

“The 2026 edition of the Global Investment Returns Yearbook reinforces the value of utilising history to understand current market dynamics,” Dan Dowd, head of global research at UBS Investment Bank, said. “With 126 years of data, it provides a powerful framework for understanding how asset allocation, diversification and the enduring principles of risk reward shape long-term investment outcomes. This historical perspective is particularly important at a time when market concentration, technological change and geopolitical uncertainty are high.”

“In periods of economic and geopolitical uncertainty, it can be easy to lose perspective of the long-term investment horizon,” Marsh said. “The yearbook, with its database stretching back 126 years, provides a rich source of information and experience to help readers screen out the short-term noise and learn from the past to better invest for the future.”