Fixed Income Allocations

Last week a few people asked to see the data behind the point on bonds and inflation, so I thought it was worth sharing a single extract directly.

The Data

The image below shows annualised return data from global government bonds over the last 20 years, which came out at around 2.5%. Over the same period, average inflation ran at roughly 3.7%.

It’s also worth adding that, in its latest report from October last year, the Investment Association stated that £12.1 trillion is invested in the UK, with 28.4% of that held in fixed income.

That’s approximately £3.4 trillion sitting in low-return assets. And because that figure is an average, it may well be that your own portfolio holds more than that, and is more exposed than you realise.

FTSE World Government Bond Index taken from Dimensional’s latest Matrix Book and used with permission

The Quiet Compounding Gap

Over time, that 1.2% gap compounded quietly in the wrong direction. That’s the part risk questionnaires never capture.

If you’d like the full data book, just reply DATA and I’ll send it over.

Why That Window

The reason I’ve circled the 20 years from 2004 to 2024 is because I think it’s a realistic retirement window when looking back.

You can also see other windows of time and draw your own conclusions about what 10 or 30 year horizons look like, depending on circumstances and retirement timelines.

And if this raises questions about how your own portfolio has been built, you’re welcome to book a non cost conversation with me.

I can take a look at what’s in place and offer a second opinion.

Originally Penned on 23 January 2026