Our current estimate of US equity large capitalization expected returns is now below 5% nominal (4.7% USD) and 3% (2.6%) in real terms, the lowest estimate we have released since we began writing these reports in 2017 and the lowest in our model’s backtest since January 2004.
We posit that the major themes affecting US equity markets are an issue not only for US investors, but for global investors alike and we provide a few ideas on how to diversify US large-cap equity exposures within long-term asset allocations.
From a tactical perspective, we are closely monitoring the possibility of a positive growth shock following the US election, at least for US assets, and will see if our measure of global risk appetite accelerates over the coming months.
Invesco Solutions develops capital market assumptions (CMAs) that provide long-term estimates for the behaviour of major asset classes globally.
The assumptions, which are based on a 10-year investment time horizon, are intended to guide strategic asset allocations. For each selected asset class, we develop assumptions for expected return, standard deviation of return (volatility) and correlation with other asset classes.
Paul Jackson, Global Head of Asset Allocation Research for EMEA, discusses his insights on portfolio allocations and strategies for the 2025 outlook.
Alternative Opportunities is a quarterly report from Invesco Solutions. In each new edition, we look at the outlook for private market assets.
We share our scenario analysis to help clients navigate an uncertain landscape. Our base case is that inflation has peaked – in which case we favour high yield credit and emerging market assets. Should inflation prove more persistent, with a deeper recession on the cards, then cash and government bonds are the order of the day. Read on for details – and for why we favour investment grade credit in both scenarios.
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.
Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.
