Growth in the value of £ 100 invested in government bonds
The figures shown relate to past performance. Past performance is not a reliable indicator of current or future results. Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and one cannot invest directly in an index. Source: Bloomberg, 30 / 06 / 2025. Bloomberg Global Aggregate Treasuries Index, GBP hedged.
The post-crisis period appears to have been an anomaly. A rare combination of steady economic growth, ultralow inflation, falling interest rates, and geopolitical calm suppressed volatility and diminished the value of diversification. That environment additionally reduced the need for dynamism in portfolio construction. But it was unlike any market regime that came before- and it seems increasingly clear that we are not likely returning to it.
As 2022 made clear, basic asset allocations can falter in periods of high inflation and low growth. Generating consistent performance in this new world requires access to a broad array of return drivers in addition to equities and government bonds. While core government bond performance has flattened, other areas of fixed income- such as emerging market debt and high yield credit- have shown greater resilience. These segments often fare better in higher inflation, higher rate settings.
Likewise, gold and commodities can offer ballast during periods of geopolitical stress, while property and infrastructure may enhance returns especially if positioned to benefit from the structural uptick in capital spending related to the roll out of artificial intelligence and renewable energy. These asset classes are not new, but their relevance has grown in a world where traditional diversification may no longer be optimal.
Net total return across asset classes and portfolios
The figures shown relate to past performance. Past performance is not a reliable indicator of current or future results. Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and one cannot invest directly in an index. Source: Bloomberg, 30 / 06 / 2025. Global Government bonds( Bloomberg Global Aggregate Treasuries Index, GBP hedged), Global Equity( MSCI ACWI Index in GBP), Gold( LBMA Gold Price), 60 / 40 Portfolio( 60 % Global Equity, 40 % Global Government Bond), calculated based on monthly data. Postfinancial crisis period: 30 / 04 / 2009 – 31 / 12 / 2021. New era: 31 / 12 / 2021 – 30 / 06 / 2025.
52 | The Adviser