Question

why would leas risky assets (t bonds and cash)

have higher returns than higher risk assets?

Answer 1

According to risk return trade off, investors expect a higher return for every unit of risk taken. So in general, least risk assets like T bonds and Cash provides lower expected returns than higher risky assets like Equity or other corporate bonds. However, although the actual expected return is higher for riskier assets, the actual return can be lesser than the lesser riskier assets due to its potential to move to either side of mean returns. So the actual returns for least risky assets like Cash and T bonds could be higher than the riskier assets as the returns for these lower riskier assets remain constant and nearly risk free.