Barclays Capital, the investment banking division of Barclays Bank PLC, has published its 2008 Equity Gilt Study, one of the oldest and most respected continually published research documents in the City.
“This year we examine the very important relationship between inflation and economic leverage. We comment on the generally positive performance of hedge funds last year and our colleagues at Barclays Global Investors talk about factors that can reduce portfolio efficiency. We recommend long term investors plan and supplement hedging strategies to protect the value of their portfolios from the damaging effects of inflation and heightened volatility,” says Tim Bond, head of Asset Allocation, Barclays Capital.
Highlights of this years edition include:
For richer, for poorer Resource scarcity is the single most important social, political and economic factor of our era and will remain so for the foreseeable future. The Equity Gilt Study examines how resource scarcity is likely to wreak significant changes to the global economy, ending the long-term trend of decreasing volatility in growth and inflation. The net result of intensifying natural resource scarcity is an increase in structural upward pressures on inflation and a worsening trade-off between inflation and growth.
Asset Returns In the UK, cash was the best performing asset returning 1.8% after inflation. Equities posted a lacklustre performance underperforming bonds in the UK and US. Equity and corporate bond performance was damaged by the summer credit squeeze, while government bond returns were weak in the face of rising monetary policy pressure in the first half of 2007. In the US, equities managed to outperform cash, however, stocks lagged behind nominal and index linked bonds.