How volatile are individual asset classes in the long run?
News Arnulf Hinkel, financial journalist – 08.12.2025
The volatility of an asset class is characterized by the frequency and severity of price fluctuations around an average value within a certain period. Volatility thus reflects the short-term risk of loss for a particular investment. Not only risk-averse investors therefore prefer an asset mix that gives the portfolio manageable overall volatility. For a relatively reliable assessment of risk, a look at the long-term volatility of each portfolio component can provide valuable insight. The World Gold Council publication ‘Gold as a strategic asset: 2025 edition’ examined the volatility of selected asset classes over a period of 20 years.
Government bonds: lowest volatility but also lowest returns
With an average daily volatility of 3.7 per cent over the last 20 years until the end of 2024, government bonds in the Eurozone are unrivalled in terms of low volatility. Global stocks came in second, but at 15.29 per cent, they already showed significantly higher daily volatility. BBG Commodities – a global commodity index that includes futures on a wide range of commodities and agricultural products – are only slightly more volatile at 15.48 per cent. Gold comes in next, and with a daily volatility of 15.6 per cent it is among the four asset classes with the lowest long-term volatility.
Highest volatility: emerging market equities and alternative investments
At 18.5 per cent, emerging market stocks have been significantly more volatile over the past 20 years, surpassed only by various asset classes referred to as alternative investments, such as private equity with an average daily volatility of 22.59 per cent and REITs for capital investments in the real estate sector with 29.74 per cent.
US stocks generated the highest average return over the last 20 years at 10.41 per cent, closely followed by gold at just under 10 per cent. By comparison, government bonds, which are significantly less volatile, performed slightly negatively at -0.3 per cent over the same period.
