n South African Actuarial Journal - Long run : debunking the mantra of the equity cult - : editorial

Volume 11, Issue 1
  • ISSN : 1680-2179


An oft-repeated mantra of the investment-management world is: "In the long run equities will outperform bonds." A slightly modified version is: "In the long run equities are expected to outperform bonds." Sometimes 'bonds' becomes 'cash' or 'bonds and cash'. The first version is patently incorrect. The second is misleading. I find these statements embarrassing, especially when they are used by actuaries to justify 'lifestyle strategies' for defined-contribution (DC) retirement funds.

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