Capital Market Assumptions: Raising Expectations for Long-Term Returns

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This research paper presents updated long-term return assumptions for various asset classes in the capital market. The paper highlights the impact of valuations and high starting yields in fixed income on these assumptions, which have been raised across the board after a tumultuous year that saw most equity and fixed income asset classes experience double-digit declines. The Federal Reserve's rate hikes, COVID-related disruptions, high inflation, and rising rates outside the U.S. are some of the factors that have influenced these assumptions.

Capital Group's latest research paper on capital market assumptions presents updated long-term return projections for various asset classes based on valuations and high starting yields in fixed income. The paper notes that despite some growth expectations declining due to structural forces, long-term return assumptions have been raised across the board after a tumultuous year marked by double-digit declines in most equity and fixed income asset classes. The paper also highlights some of the factors that have influenced these assumptions, including rate hikes by the Federal Reserve, COVID-related disruptions, high inflation, and rising rates outside the U.S.

Factors Influencing Long-Term Return Assumptions

The research paper emphasizes that its long-term return assumptions are not intended to provide any assurance or promise of actual returns but rather reflect long-term projections of asset class returns based on respective indices or other proxies without any outperformance gain or loss resulting from active portfolio management included. It also notes that while past results are not a guarantee of future results, estimates are shown for illustrative purposes only. Click "Report" to discover more about Capital Group's updated long-term return projections for various asset classes in the capital market and the factors that have influenced these assumptions.