A comprehensive study published on October 27, 2025, by the Deutsche Bank Research Institute (“The Ultimate Guide to Long-Term Investing”) offers a robust analysis of long-term asset class performance, drawing on over two centuries of data from 56 economies. The reported findings align with the principles of diversified and buy-and-hold investing, and provide important context for the role of both productive (income generating) and nonproductive (non-income generating) assets in a portfolio.
Key Takeaways:
- Productive Assets Consistently Outperform
- Over the past 200 years, global equities have delivered a median real (inflation-adjusted) return of 4.9% per annum (p.a.) in USD terms. A classic 60/40 equity/bond portfolio returned 4.2% real p.a., government bonds 2.6% real p.a., and bills 1.9% real p.a.
- Nonproductive assets like gold returned just 0.4% real p.a. over the same period. Cash (not earning interest) lost value at -2.0% real p.a.
- Diversified and Buy-and-Hold Strategies Are Robust
- The probability of equities underperforming “cash under the mattress” (nominal terms) over a 25-year period is just 0.8%; for a diversified 60/40 portfolio, the chance of a negative nominal return over 25 years is only 0.1%.
- Over shorter horizons, risk increases: equities fail to beat inflation in about 25.8% of 5-year periods, and bonds in about 25% of such periods.
- Gold’s Recent Outperformance is the Exception, Not the Rule
- While gold has outperformed all major asset classes in real terms since 2000 (7.45% real p.a.), this is an anomaly. Over the long term, gold has lagged far behind income-generating assets.
- US equities, for comparison, returned 5.8% real p.a. since 2000; government bonds returned 0.9–0.6% real p.a. in major developed markets.
- Drawdowns and Risk Management
- Severe, long-lasting equity drawdowns are rare but possible (e.g., Japan 1989–2022, Italy early 20th century). Bond drawdowns can be even more persistent and severe, especially during wars and inflationary periods.
- The classic 60/40 portfolio has historically provided better risk-adjusted returns than equities alone in nearly all economies.
Conclusions: Diversified and buy-and-hold strategies are a reliable approach for individual investors seeking to build and preserve long-term wealth, consistent with a passive indexing philosophy. Productive, income-generating assets including equities and bonds have historically been the most reliable sources of long-term wealth accumulation and preservation. While nonproductive assets such as gold may be incorporated into a portfolio, their long-term historical performance record has lagged far behind the compounding power demonstrated by productive assets.
Source: Deutsche Bank Research Institute, “The Ultimate Guide to Long-Term Investing,” October 27, 2025.