Discover our long-term expected returns across all major asset classes, factoring climate pathways and social considerations.
Key Points
Delays in climate policy, rising geopolitical tension and the adoption of Artificial Intelligence (AI) are reshaping the long-term economic pathway. The evolution of these trends and the impact of high valuations in some areas will determine future expected returns. Bonds as a portfolio engine are back, while equity will see a reversal with the renewed appeal of global and Emerging Market equities. Emerging Market bonds, Hedge Funds and Private Debt will also become more attractive thanks to their diversification benefits.
- A disorderly transition, helped partially by Artificial Intelligence
- Central banks’ efforts to balance price stability with low yields for investors
- A challenging net zero road for many emerging markets, with some winners
- A carbon tax will need to be assessed in a fair transition framework
- Expect lower returns and higher volatility, particularly for equities
- Bonds are back as a portfolio engine, with quality in focus
- In search for diversification consider EM Debt, Hedge Funds and Private Debt
- In equities, India and EM ex China offer the most appealing returns. The US (overall market) should lag. An equal weight approach will be favoured in the US
- Sector opportunities will help enhance return potential
- Real and alternative assets deserve a place in Strategic Asset Allocation
