“Keep faith in UK equities,” advises Scott Evans of the London Business School: “They’ve done well over 70 years.” Over that time, annualised real returns for Treasury Bills (comparable with savings accounts) have been 1.4%; for long-dated gilts, 2.1%; house prices 2.8%, world equities 6.3%, and UK equities 6.5%. UK smaller companies, at 9%, have performed even better, but have lagged in recent years.
Yet unlike US investors, British ones chase after the lowest returns. According to Janus Henderson, cash savings rose £51 billion last year to £2.05 trillion, or 80% of the national debt. Half of defined-benefit pension funds’ assets are invested in bonds, despite yields having risen (and thus values fallen) for four years. According to Abrdn, 50% of personal wealth is invested in property, nearly double the ratio in the US, and just 8% in stock markets. This is the lowest in any G7 country and compares with 33% in the…
