- Global equities will return between 7 and 9% over the next 10 years
- The 10-year yield for U.S. Treasuries will reach 4% in six years
- Alternative asset classes' returns will be in line with public equity markets on a risk-adjusted basis
Each year, BNY Mellon Investment Management develops capital market return assumptions for approximately 50 asset classes around the world. The assumptions are based on a 10-year investment time horizon and are intended to guide investors in developing their long term strategic asset allocations. They combine general market expectations and consensus data, adjusted to reflect research and views on potential market dislocations from across BNY Mellon Investment Management.
Some of the paper's key points are:
- Global equity market returns will likely range from 7% to 9% over the next 10 years. Emerging market equity will lead the way with returns near 9%, primarily due to stronger earnings growth compared to developed markets.
- U.S. Treasury yields will likely rise until they reach a normalized level in six years, with the 10-year yield rising to 4.0% and the 30-year yield rising to 4.5%.
- Overall, fixed income returns will be suppressed due to low current yields and principal losses due to rising interest rates.
- Expected returns for alternative asset classes will generally be in line with public equity markets on a risk-adjusted basis.
Led by BNY Mellon Fiduciary Solutions, the capital market assumption team consists of more than 30 investment professionals including investment strategists, economists, financial advisors, manager research specialists, and portfolio managers.
You can access the full report on the following link.