Lost decades in equities have always been followed by positive decades, according to Fidelity International.

In analysing the Barclays Equity-Gilt Study, Fidelity International reveals that every rolling decade of negative equity returns has been followed by a decade with positive average annual returns.

The latest Barclays study shows that UK equities have suffered average annual returns of -1.5 per cent in the decade to the end of 2008, far from the worst decade on record.

The research, a benchmark analysis of asset class returns, shows that since 1899 there have been 17 rolling decades of negative equity returns.

The first was 1906-15 which saw an average annual total return of -0.2 per cent. This was followed by eight consecutive decades of negative returns, the last being 1914-23 at -1.3 per cent.

However, each of the decades immediately following a decade of losses has provided positive average annual total returns.

For example, from 1916 to 1925, average annual total returns were 3.9 per cent and 1924-33 returned 9.6 per cent.

Rob Fisher, head of UK personal investments at Fidelity International, says, ‘Markets recover from losses, even big ones. This analysis shows not only that equities have underperformed for a ten-year period before, but also that the decade immediately afterwards is when we see many instances of handsome returns.

‘For example, the last but one “lost” decade ended in 1982, with annual losses of 1.2 per cent. However, investors who persisted for just a year would have seen the decade to 1983 provide an average of 5.2 per cent and those who stayed invested from 1983 to 1992 would have seen 12.7 per cent a year.

Fisher advises nervous investors to consider their long-term goals, make best use of tax-efficient savings plans such as ISAs, and remember that history has shown again and again that time can reward the patient investor.