The Balancing Act: Forecasting Asset Returns Amid Economic Uncertainty

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LONG-TERM STRATEGIC OUTLOOK

A five-year returns forecast for major asset classes — updated twice a year to help you set strategic portfolio allocations

The strategic outlook for major asset classes over the next five years is marked by uncertainty, with equal odds (40/40) of either a recession or a weak period of economic growth, also known as a "soft landing." Inflation has peaked but remains high, driving consumer sentiment to record lows. Despite strong labor market conditions, the Fed has reduced its aggressive rate hikes, with further increases expected in the first half of 2023.

Market Volatility and Future Earnings Expectations

US-based companies are anticipated to experience solid earnings growth in 2022, but multiples have contracted sharply as rates have risen and expectations for earnings in 2023 have fallen. As the market continues to digest the impact of monetary tightening, a volatile period lies ahead for asset returns. To navigate these challenges and make informed strategic portfolio allocations, click "Click report" to access the full research paper on the five-year returns forecast for major asset classes.