For professional clients only. The information contained within this post is not intended for retail clients.
30 September 2026
It is worth highlighting a recent interesting article by Bloomberg’s John Authers. Authers highlights the long-term chart of the TLT exchange-traded fund (this ETF tracks US Treasuries with a maturity of twenty years or longer). Data on the TLT ETF goes back to December 2002. From this date to the end April 2020, it generated a compound annual growth rate of 7.45%, almost as good as the MSCI World Index (+7.75%) with the COVID pandemic supercharging returns at the end of the period. Given the higher inherent risk, or volatility, of equities compared to Treasuries this proved a golden era.
However, from April 2020 to September 2026 the TLT ETF has generated a compound annual growth rate of -8.25%. Over the same period the MSCI World Index has generated a compound annual growth of +16.29%. In round numbers, equities have outperformed US Treasuries (measured by the TLT ETF) by nearly 200% over the past six years.
Authers highlights Robert Shiller’s excess CAPE yield which compares the cyclically adjusted earnings yield (inverse of PER) for equities over the previous ten years. The measure is obviously only for investors with a long-time horizon. Shiller’s CAPE yield has a fabulous long-term record and, today, is suggesting that equities will outperform Treasury bonds by just 1% annually over the next decade.
It is noteworthy that Gold Bullion has declined by over 25% from recent highs. Gold yields nothing. The two-year Treasury now yields 4.9%, up from circa 3.4% at the start of the year. Yields are higher for longer maturities. The MSCI World Index trades at circa twenty times earnings and yields 1.5% (excluding buybacks). The four most dangerous words in the investment industry? ‘This time it’s different’.
To clarify, this note is being penned by an equity, not fixed income, investment manager. Hopefully, the above is food for thought.