An analysis by Rob Arnott of Research Affiliates suggests the equity bias of most fund managers might be totally misconceived. In a piece to be published in a forthcoming issue of the Journal of Indexes, he points out that, in the US at least, bonds have beaten equities not just over the past 10 years but the past 40 years, since 1969.
John Authers ruminated on the implications for investors in his column on Saturday. But asset managers need to take a long hard look too. Have they been betting on the wrong asset class all these years? Or is the analysis the sign that markets are about to turn – the death of the equity has been forecast before sharp upturns in the past.
Anyone who thinks the latter to be true is probably clinging to what has to date been regarded as conventional wisdom like a drowning man to a life raft.
