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Long-term capital market assumptions (LTCMA) form a vital component of some systematic long-term asset allocation approaches. This report highlights significant developments to our 10-year forecasts since the last review, and the impact of macroeconomic developments, monetary policy and yields. Select LTCMA are summarized across equities, fixed income and commodities.

We see growth and income return potential as interesting across risk assets. A more normalized yield environment after years of quantitative easing is likely to support fixed income but the speed and size of monetary policy adjustments could be a swing factor and a number of other “known” and “unknown” unknowns could impact these forecasts. A modest decline in our overall return forecasts is due to tighter valuations compared to last year, rather than a marked change in the overall environment. 

 

Key takeaways:

  • Normalized yield environment after years of quantitative easing is likely to support fixed income.
  • Growth and income return potential is interesting across risk assets.
  • Modest decline in overall return forecasts is due to tighter valuations compared to last year.

 

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The CIO Special below is available to download. Please refer to the Important Information at the end of the memo for disclosures and risk warnings.

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