6  BIS Review 148/2008  escalates as well, and in certain periods a pure equity strategy may be overtaken by a bond strategy. Moreover, holding period returns clearly indicate that even over long-term accumulation periods the returns from a pure equity strategy may be subject to large drops, as may happen when the holding period includes the first ten months of 2008.
This bird’s eye view of financial market returns also shows that by holding a balanced portfolio of stocks and fixed-income instruments, long-term investors may try to increase expected portfolio returns, while keeping return volatility moderate.