do global stocks outperform us treasury bills?

do global stocks outperform us treasury bills?

The question do global stocks outperform us treasury bills is central to debates about equity risk, portfolio construction, and how wealth is created across firms and countries. This article summarizes the best‑known research on the topic, led by Hendrik Bessembinder and collaborators, explains the data and methods used, highlights key empirical findings (including the surprising concentration of wealth creation), surveys cross‑country patterns, lists practical implications for investors, and notes major caveats and updates. Readers will learn what the phrase means in academic terms, what the evidence says as of key publications, and how to use those insights when thinking about broad market exposure — including practical options on platforms such as Bitget and Bitget Wallet for diversified access.

As of July 2019, according to the SSRN posting of Bessembinder et al. (2019), the global follow‑up study covering 1990–2018 reported that a majority of individual global common stocks failed to outperform one‑month US Treasury bills and that net wealth creation was highly concentrated among a small fraction of firms. As of June 2024, the UBS Global Investment Returns Yearbook reaffirmed long‑run equity premia at the index level while noting substantial variation across countries and periods.

Background and definitions

In academic usage the phrase do global stocks outperform us treasury bills is shorthand for a well‑specified empirical comparison: measuring the compound (dollar‑weighted) lifetime returns of common stocks issued by firms located around the world against a short‑term, near‑risk‑free benchmark — typically the one‑month US Treasury bill. Key terms:

• Global stocks / common stocks: ordinary equity shares issued by companies across multiple countries and traded on public exchanges. Studies typically include all share classes that represent common equity.
• US Treasury bills (T‑bills): short‑term government debt; researchers commonly use the one‑month T‑bill as a risk‑free short horizon benchmark when comparing lifetime, compound returns.
• Outperform: in this literature “outperform” means generating a higher cumulative or compound return over an investor’s holding period (often a stock’s full lifetime) than the return available from investing in the one‑month US T‑bill over the same period. Researchers often present both dollar‑weighted wealth‑creation measures and conventional average/median return statistics.

Why compare risky equities to short‑term bills? A benchmark of one‑month US T‑bills represents the opportunity cost of holding cash-like, risk‑free assets over short horizons and provides a conservative test of whether individual stocks create real wealth for buy‑and‑hold investors. Comparing global stocks to a single common benchmark (US T‑bills) also facilitates cross‑country aggregation and comparison.

Principal studies and publications

The empirical literature that frames the question do global stocks outperform us treasury bills is led by a sequence of high‑impact studies and supporting materials.

Bessembinder (U.S. study) — "Do Stocks Outperform Treasury Bills?"

Hendrik Bessembinder’s influential U.S. analysis examined the lifetime, dollar‑weighted returns of all common stocks listed in U.S. markets over long samples. The U.S. study found that while broad market indices produced positive excess returns versus T‑bills, most individual common stocks failed to outperform one‑month US T‑bills over their lifetimes. A very small subset of stocks — the rare “superstar” winners — generated the bulk of net wealth creation in U.S. markets. This finding highlighted extreme positive skewness in individual stock returns and challenged simple interpretations of average equity premia.

Bessembinder et al. (global study) — "Do Global Stocks Outperform US Treasury Bills?" (2019)

The 2019 global follow‑up expanded the U.S. analysis to a large cross‑country sample (the global paper’s core sample roughly spans 1990–2018). The global study reported that a majority of individual global stocks underperformed one‑month US T‑bills over their lifetimes and that global net wealth creation was concentrated among a small fraction of firms. The study converted local returns into US dollars for aggregation, treated delistings explicitly, and used a wealth‑creation accounting approach to measure cumulative dollar gains and losses relative to T‑bills.

Related academic and practitioner literature

Subsequent and complementary work — including cross‑country studies in peer‑reviewed journals and long‑run return compendia such as the UBS Global Investment Returns Yearbook and NBER historical studies — provides context on how equity returns vary by country, time period, and methodological choices. Some articles examine why certain markets or governance environments produce different patterns of outperformance.

Data and methodology

Understanding the phrase do global stocks outperform us treasury bills requires attention to datasets and methodological choices. Different choices materially affect headline results.

• Typical datasets: researchers use comprehensive share‑level databases such as CRSP for U.S. stocks and comparable national or commercial datasets for non‑U.S. markets. The global study assembled large cross‑national samples covering listings and returns for firms in many countries.
• Sample years and coverage: the Bessembinder global analysis focuses on roughly 1990–2018; the U.S. study examines nearly a century in some specifications. Sample start and end dates matter for the results.
• Currency conversion: to compare and aggregate global wealth creation the global study converts local currency returns into US dollars. Exchange‑rate movements can amplify or dampen local equity returns in dollar terms.
• Handling delistings: crucial decisions include whether to assign delisting returns for bankruptcies, buyouts, or mergers and how to treat firms that vanish. Properly including negative delisting returns increases the share of firms that fail to beat T‑bills.
• Wealth‑creation accounting: Bessembinder’s approach aggregates dollar gains and losses across investors and firms to identify net wealth creation relative to T‑bills. This dollar‑weighted metric emphasizes the economic importance of large winners over average percentage returns.

Wealth creation metric vs. average/median returns

The do global stocks outperform us treasury bills literature stresses the difference between aggregate, dollar‑weighted wealth creation and conventional average or median return statistics:

• Mean and median returns tell one story about typical percentage outcomes across firms.
• The wealth creation metric sums actual dollar gains/losses to show which firms contributed or subtracted from overall investor wealth relative to T‑bills. A small number of very large percentage gains in firms with sizable market caps can dominate dollar gains even if many firms show positive average percentage returns.

This distinction explains why broad indices (which weight by market cap) can show persistent equity premia while most individual, equal‑weighted stocks may underperform a short‑term risk‑free rate.

Treatment of delistings, corporate actions, and currencies

Key technical choices include how to impute returns on delisting events (bankruptcy versus takeovers), how to aggregate share classes, and how to handle cross‑listings and ADRs. Currency conversion decisions (spot returns vs. hedged returns) change dollar‑value outcomes for global aggregates.

Key empirical findings

The core empirical takeaways framed by the question do global stocks outperform us treasury bills are:

• At the aggregate index level, equities have historically earned positive excess returns versus short‑term T‑bills.
• For individual common stocks, a majority has historically failed to outperform one‑month US T‑bills over typical lifetimes in both U.S. and global samples.
• Wealth creation is highly concentrated: a very small fraction of firms — the "superstar" winners — account for most net aggregate wealth creation in samples.

U.S. market findings

In the U.S. analyses, the proportion of individual stocks that underperformed one‑month T‑bills depends on sample and method, but the central result is robust: many individual firms underperform, and a small subset produces outsized gains. Depending on sample years and delisting treatment, studies have reported substantial fractions of U.S. stocks failing to beat T‑bills.

Global and non‑U.S. findings

Bessembinder et al.’s global paper extended the finding beyond the U.S.: across the 1990–2018 sample and multiple national markets, a majority of global stocks underperformed the one‑month US T‑bill in lifetime, dollar‑weighted terms. The study documented extreme skewness and reported that the top approximately 1–2% of firms contributed the vast bulk of net global wealth creation in the sample. These results illustrate that global stock markets, when aggregated, can deliver a positive equity premium even while most individual equities do not exceed short‑term government bills.

Concentration of wealth creation

A recurring numeric finding is the heavy concentration of net gains: in many samples, the top few hundred firms (and often the top 1% of listings) explain the majority of cumulative net wealth created relative to T‑bills. This pattern holds across U.S. and international samples and is robust to alternative wealth accounting choices, though precise percentages vary by period and dataset.

Cross‑country variation and explanatory factors

The pattern do global stocks outperform us treasury bills shows important heterogeneity across countries. Several country‑level characteristics correlate with the likelihood that individual stocks outperform a short‑term US benchmark.

Governance, market development, and openness

Countries with stronger corporate governance, deeper and more liquid capital markets, higher financial openness, and more stable macroeconomic environments tend to produce a larger share of outperforming firms. Conversely, less developed markets often show higher fractions of underperforming stocks due to weaker legal protections, lower liquidity, and greater corporate risk.

Investor behavior and cultural factors

Behavioral and institutional differences — such as differences in retail participation, concentration of ownership, cultural traits like individualism, and prevalence of speculative trading — can influence cross‑country patterns. Some studies document links between cultural or behavioral proxies and the relative frequency of large winners or losers.

Implications for investors and portfolio strategy

The practical lessons tied to the question do global stocks outperform us treasury bills are relevant to asset allocation, index construction, and active fund management.

Passive vs. active management

The skewness of wealth creation argues in favor of broad, market‑cap‑weighted exposure for most investors who wish to capture the few large winners that drive aggregate gains. For active managers, the presence of rare large winners creates potential opportunity but also high difficulty: finding the future superstar firms beforehand is challenging and requires skill plus luck.

Diversification and portfolio construction

The most direct risk for investors who try to pick individual winners is missing the rare large winners that generate most wealth. Practical recommendations from the literature include:

• Broad diversification across many firms and markets to increase the odds of holding future winners.
• Consideration of market‑cap weighting vs. equal weighting: market‑cap‑weighted indices naturally allocate more capital to the firms that have become large winners, while equal weighting treats each listing equally and may underweight historical winners.
• Geographic and factor diversification to reduce reliance on any one country’s cohort of winners.

For investors exploring execution and custody, platforms such as Bitget and Bitget Wallet provide diversified market access and wallet solutions; these platforms can complement traditional brokerage or institutional arrangements for multi‑asset allocation, though platform selection should follow careful security and custody evaluation.

Criticisms, limitations, and methodological caveats

The literature answering do global stocks outperform us treasury bills is subject to important caveats that affect interpretation.

Choice of benchmark and horizon

Using the one‑month US T‑bill as the benchmark is conservative but not the only possible choice. Using longer‑term government bonds, a local risk‑free rate, or a time‑weighted return measure changes the percentages of firms classified as outperformers. Short sample windows and start/end dates can heavily influence results.

Measurement sensitivity (delistings, returns aggregation)

How researchers treat delisting returns (e.g., zero, negative, or takeover premiums), stock splits, share classes, and cross‑listings materially affects outcomes. Survivorship bias, if not handled, can overstate equity performance. The global studies took care to include delisting returns, but results remain sensitive to alternative imputations.

Subsequent updates and extensions

The question do global stocks outperform us treasury bills continues to attract follow‑on work. Authors have released replication spreadsheets and code; academic and policy researchers have applied similar wealth‑creation accounting at longer horizons, for specific sectors, and using updated datasets.

Data releases and replication materials

Bessembinder and collaborators have provided replication materials and spreadsheets to aid verification and extension. Institutional pages (e.g., university research pages) host updated tables that allow researchers and practitioners to run alternative specifications and extend samples forward as new market data become available.

Broader historical context

Long‑run historical studies (for example, the UBS Global Investment Returns Yearbook and NBER historical research) show that equities have tended to outperform bonds and bills at the index level over very long horizons. However, those long‑run index premia co‑exist with the paper’s key result: individual listing outcomes vary greatly, and much wealth creation is driven by a small share of firms. This nuance helps reconcile the long‑run equity premium with the high rate of underperformance at the single‑stock level.

See also

• Equity risk premium
• Treasury bill
• Index investing
• Survivorship bias
• CRSP database
• Wealth‑creation accounting

References

• Bessembinder, H. (2018). Do Stocks Outperform Treasury Bills? (U.S. study).
• Bessembinder, H., et al. (2019). Do Global Stocks Outperform US Treasury Bills? (SSRN / working paper, global sample 1990–2018).
• ASU W. P. Carey summary and replication materials for Bessembinder’s work (replication spreadsheets and datasets).
• ScienceDirect — cross‑country analyses of stock vs. T‑bill performance (international market evidence).
• NBER — historical studies on global stock markets and long‑run returns.
• UBS Global Investment Returns Yearbook (2024) — long‑run asset‑return context.

External materials and data notes

• Replication spreadsheets, data tables, and institutional pages for the Bessembinder studies are publicly referenced in academic circles and hosted by the authors’ institutions and research repositories.

Further reading and data downloads are available via the original authors’ research pages and institutional repositories. For hands‑on, multi‑asset market access and custody, consider evaluating Bitget’s exchange services and Bitget Wallet for streamlined, secure exposure across listed assets.

Practical next steps for readers

If you read this article to answer the question do global stocks outperform us treasury bills, you now know the headline: broad equity indices have historically outperformed short‑term US T‑bills, but most individual stocks have not — and a tiny fraction of firms account for most net wealth creation. To explore the topic further:

• Review the Bessembinder replication spreadsheets for exact numbers and country‑level breakdowns.
• Compare alternative benchmark choices (different risk‑free rates, hedged vs. unhedged returns) to test sensitivity.
• If you need cost‑effective market exposure, evaluate market‑cap‑weighted funds or diversified strategies and consider secure platforms such as Bitget and Bitget Wallet for custody and execution.

As always, this article is for educational purposes and does not constitute investment advice. For up‑to‑date numbers, consult the original papers and institutional data releases.