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HONG KONG, Mar 1, 2011 - (ACN Newswire) - The Credit Suisse Global Investment Returns Yearbook and Sourcebook are produced for the Credit Suisse Research Institute by London Business School professors, Elroy Dimson, Paul Marsh and Mike Staunton. They are the global authority on long-run investment returns. The Sourcebook, which analyses the long-term worldwide performance of stocks, bonds, bills, inflation and currency, was published on February 7. The yearbook is published today.
The 2011 Yearbook reports substantial profits from strategies that aim to enhance income. This surprising evidence spans 21 countries and periods of up to 111 years. At a time when investors find it challenging to generate the income they need and when they are concerned about accelerating inflation, this new research is exceptionally topical.
Guiles Keating, Head of Private Banking Research at Credit Suisse, said, "We are proud to be associated with the work of Elroy Dimson, Paul Marsh, and Mike Staunton, whose research has had a major impact. The Credit Suisse Investment Returns Yearbook is now widely read by investors."
Stefano Natella, head of Global Equity Research at Credit Suisse, said: "In inflationary times, investors need strategies that are supported by solid evidence. The authors' research has breadth, depth, and rigor. It is precisely the kind of world-class work that the Credit Suisse Research Institute supports."
Building on a database covering 111 years of financial market returns in 19 countries, from 1900 to date, the Credit Suisse Global Investment Returns Yearbook 2011 provides a definitive record of long-run investment returns. It puts the current outlook for asset prices in perspective as the global economic recovery gathers pace, and as inflation becomes a leading matter of concerns to investors. In this context, Elroy Dimson, Paul Marsh and Mike Staunton of London Business School examine two very relevant issues.
First, following the decades-long bull market in fixed income since 1982, they ask whether investors should now be fearful of bond market. In "Fear of Falling", they question whether the strong bond returns of the last quarter century can continue. They examine periods when there have been sharp falls, or drawdowns, in the real value of government bonds - typically during inflationary episodes - and how long these have persisted. From a cross-asset class point of view, this article investigates the correlations between bonds and stocks and how these have changed over time. They show how bond values have been eroded by inflation, but they demonstrate that investing in bonds, once inflation is established, can give rise to higher long-run real returns, thereby providing some compensation for the additional uncertainty about future purchasing power. They conclude that it would be fantasy to expect a continuation of the high real bond returns achieved since 1982.
In their second paper, the three academics turn to investors' current search for income. In 'The Quest for Yield', they examine whether income, per se, should matter to equity investors, and focus on the contribution of income and long-run dividend growth to long-term stock returns. Within equity markets, they look at the performance of yield-tilt strategies, and at the risk and risk-to-reward ratios of different income-oriented approaches. They also look across markets to see whether higher-yielding countries have outperformed lower-yielding markets. In general, the authors highlight that investment strategies favoring stocks and markets with high dividend yields tend to pay off handsomely over the long run for the patient investor. They also present a long-term perspective on the risk and return from investing in corporate bonds.
In a third paper, 'Market Implied Returns: Past and Present', the Yearbook takes a different, market-based view on risk premia, asking what discount rates are implied by current market levels. From Credit Suisse, David Holland and Bryant Matthews use the proprietary Credit Suisse HOLT framework to investigate historical market-implied expectations and quantify what equity markets are currently pricing in. They conclude that, in the case of developing and resource-rich markets, future growth and optimism are already embedded in market expectations. Mature, developed markets look attractive in comparison.
The attached presentation, given at today's press launch in London, provides an overview of the research presented in the Credit Suisse Global Investment Returns Yearbook 2011.
Obtaining the Yearbook
Journalists may mail a request for a complimentary copy to Strategic Public Relations Group.
Contact:
Strategic Public Relations Group
Pret Law
Tel: +852 2114 4342 / +852 9226 1309
E-mail: pret.law@sprg.com.hk
Iris Pang
Tel: +852 2114 4992 / +852 9226 9011
E-mail: Iris.pang@sprg.com.hk
Topic: New Product
Source: London Business School
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