INVESTORS MAY NOT GET BACK THE AMOUNT ORIGINALLY INVESTED.
This simultaneous drawdown across asset classes challenged the assumptions underpinning many traditional multi-asset strategies and marked the beginning of a new market regime.
In the years following the Global Financial Crisis, financial markets experienced one of the most prolonged and powerful rallies in modern history. Asset prices rose broadly and persistently, so keeping things simple was rewarded. Investors benefited from steadily rising indices, and the investment industry responded with increasingly streamlined solutions. For a time, the question of how best to invest seemed to have a straightforward answer: buy, hold, repeat. This approach worked remarkably well- until it didn’ t.
The so-called“ everything rally” came to a sharp halt in 2022, when both equities and government bonds posted double-digit losses. The once-reliable 60 / 40 portfolio- 60 % equities, 40 % government bonds- suffered losses exceeding 15 % 1. This simultaneous drawdown across asset classes challenged the assumptions underpinning many traditional multiasset strategies and marked the beginning of a new market regime.
Since then, a different dynamic has taken hold. Equities have continued to grow, but at a more measured pace than in the 2010s. Meanwhile, government bond performance has stalled, with yields rising and capital values under pressure. The chart below illustrates the stagnation in the value of £ 100 invested in global government bonds since 2022.
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