December 2022: poor investment year ends in style

Despite a good start to the fourth quarter of 2022, all asset classes were trading in red territory again in December. This marked a fitting close to the poor investment year of 2022. Investors will look back on 2022 mostly as the year of high inflation and rising interest rates. These two elements caused negative returns not just on government bonds, but also on all other asset classes. This made 2022 an exceptional investment year. Years with negative returns on equities are not unusual (six times this century alone until 2022), but they are usually offset by positive returns on government bonds. Years with negative bond yields are considerably rarer, and an annual return on European government bonds of 18.5%, as in 2022, is particularly exceptional. The combination of negative annual returns on both equities and bonds only happened twice before in the past 100 years, in 1931 and 1969.