dollars, investors reaped an average inflation-adjusted return
of 6.77 percent per year.
According to the report the simplest way to de-construct a long-term bond yield is to split it into the expected inflation rate that is expected to prevail over the lifetime of the bond and the remaining 'real' yield that is real, inflation-adjusted return
that bond holders demand.
* The real annual total equity returns of approximately 10% may be compared to the findings of Wharton Professor Jeremy Siegel--the stock market has generated an annual average, inflation-adjusted return
of 6.8 % from 1802 through year-end 2006.
Using this strategy we find that Zimbabwe's stock market had the greatest nominal return while Kenya's had the lowest return; Botswana's stock market had the best inflation-adjusted return
while the stock market of Kenya had the worst return; and Zimbabwe's stock market had the best U.S.
So her real inflation-adjusted return
is only 7.69%.
Considerations such as current spending requirements, tax implications, and inflation-adjusted return
may also be addressed through the asset-allocation process.
From Table 2, commercial real estate generated an average annual inflation-adjusted return
of 3.1% over the time period.
The average inflation-adjusted return
on pension accounts was 8% in 1998, with that return averaging 11% in the first half of this year.
"Since the bonds will have a higher inflation-adjusted return
than regular bonds or money market funds have earned historically," he notes, "they may be used as a substitute for stocks when the equity market looks expensive."
Once these costs are factored in, the inflation-adjusted return
In addition to the constant dollar security we include inflation-adjusted return
indices for five other financial asset classes: (1) U.S.
As developed market interest rates stall or fall and the inflation-adjusted returns
on most sovereign debt drops to negative territory once again -- the global search for yield by institutional investors is as urgent as it has ever been.