Article

The returns of a decade past, and other Dickensian lessons

4 December 2021
Drew Thronton
Drew Thornton
Head of Thought Leadership, Investment Solutions
The returns of a decade past, and other Dickensian lessons
Brussels, Belgium

As investors, we need to learn from the past, take note of the present, and watch out for what the future has in store. A bit like Scrooge.

Our Investment Solutions Team provides a clear line of sight into investor portfolios, uncovering potential blind spots. The team offers expert investment insight, advanced analytics, and strong advisory partnerships.

‘I will live in the Past, the Present, and the Future. The Spirits of all Three shall strive within me. I will not shut out the lessons that they teach’ – Charles Dickens, A Christmas Carol

These are the returns of a decade past… and our 10-year capital market assumptions (CMAs)

Source: Invesco as at 30 September 2021. Expectations relative to historical average (EUR). Proxies listed in the footnotes section. The estimates are forward-looking and are not guarantees. They involve risks, uncertainties and assumptions. Please see the footnotes section for information about our CMA methodology. These estimates reflect the views of Invesco Investment Solutions. The views of other investment teams at Invesco may differ from those presented here.

This is the economy of Christmas present

Many of the risks that existed before the pandemic are still relevant today:

  • Elevated valuations in developed economies will likely detract from prices.
  • Some of the largest bubbles exist outside of equities, in the fixed income market. These centre on duration and inflation risk.
  • Rates are low and rising, with spreads on most credit assets back to pre-pandemic tights.
These are our views for Christmases yet to come

Over the next decade, we believe non-US equities (particularly those in emerging markets) and diversifying alternatives (like infrastructure and commodities) will perform well. 

Count down to Christmas with our festive charts as we publish a new piece each day. Recognise the images that feature on our calendar windows? Each corresponds to a city where an Invesco office is based.

Macro / Market insights Return to calendar homepage

Related insights

  • CMA Methodology

    The following proxies were used for the CMAs shown:

     

    Fixed income

    ·         US HY Corps: BBG BARC US HY

    ·         US IG Corp: BBG BARC US IG

    ·         China RMB Credit: BBG BARC China Corporate 

    ·         US TIPS: BBG BARC US TIPS

    ·         China Policy Bk & Tsy: BBG BARC China PB Tsy TR

    ·         EM Agg: BBG BARC EM Agg

    ·         US Muni: BOA ML US Muni

    ·         US Agg: BBG BARC US Agg

    ·         US Broadly Synd. Loans: CSFB Leverage Loan

    ·         US Tsy: BBG BARC US Tsy

    ·         US MBS: BBG BARC US MBS

    ·         Global Agg: BBG BARC Global Agg

    ·         Global Agg ex-US: BBG BARC Global Agg ex-US

     

    Equity

    ·         US Large Cap: S&P 500

    ·         US Mid Cap: Russell Midcap

    ·         US Small Cap: Russell 2000

    ·         Global Equity: MSCI ACWI

    ·         Japan Equity: MSCI JP

    ·         EAFE Equity: MSCI EAFE

    ·         Europe Equity: MSCI Europe

    ·         APAC ex-JP: MSCI APXJ

    ·         Canada Equity: S&P TSX

    ·         China Large Cap: CSI 300

    ·         EM Equity: MSCI EM

    ·         UK Large Cap: FTSE 100

     

    Alternatives

    ·         US REITs: FTSE NAREIT Equity

    ·         Global REITs: FTSE EPRA/NAREIT Developed

    ·         Global Infra: DJ Brookfield Global Infra Composite

    ·         HFRI Hedge Funds: HFRI HF

    ·         GS Commodities: S&P GSCI

     

    Agg = Aggregate, Infra = Infrastructure, Corp = Corporate, DJ = Dow Jones, HY = High Yield, Muni = Municipals, Tsy = Treasury, ML = Merrill Lynch, EM = Emerging Markets, IG = Investment Grade, APAC = Asia Pacific, MBS = Mortgage Backed Securities, TIPS = Treasury Inflation Protected Securities.

  • 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.

  • All data is provided as at the dates shown, sourced from Invesco unless otherwise stated.

    This document is marketing material and is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell securities.

    Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals, they are subject to change without notice and are not to be construed as investment advice.