According to Barclays’ 68th Equity Gilt study which calculates returns for assets adjusted for inflation, even after last year’s poor returns, stocks adjusted for inflation still came out on top with above-average returns for the decade, and were the only major asset class that appreciated in value. In 2022, adjusted for the consumer price index, US equities dipped by 24.4%, which was not even the worst of the major assets. Treasury inflation-protected bonds plunged 36.1%, government bonds fell by 30.4%, and corporate bonds weakened by 30.1%.
Over a decade, equities returned 8%, making it the only positive asset class of the 2012 to 2022 period. That return over a decade was above the long-run average of 6.6% since 1925. The latest forecasts from Vanguard, released on Monday, predict average annual gains from U.S. equities between 4.1% and 6.1% and inflation between 2% and 3%, which means that the real gain for stocks might reach a low of 1.1%. Vanguard expects annual returns from Treasury bonds to be between 3.3% to 4.3% per year, which is not dissimilar to the inflation-adjusted performance over the last 20 years of 1.4%.
Barclays’ data indicates that the worst-ever annualized return for U.S. equities, adjusted for inflation, over a 20-year period was 0.9%, but the firm cautions that losing money over such a timeframe is not impossible either.

In the UK, the story was somewhat similar, with equities adjusted for inflation dropping 11.5% last year but growing 2.6% over the last decade. Over the last 123 years, UK stocks have grown by an average annual rate of 4.8%. Barclays also emphasises the significance of reinvestment. The value of $100 invested in shares in 1925 was $23,726 without reinvesting, and $791,966 with reinvesting. Adjusted for inflation, this is the difference between $1,431 and $47,764.
The S&P 500 this year has gained 9%, while the S&P U.S. government bond index returned 2%. Consumer prices have risen by 4.9% in the 12 months to April.