In this 2022 update, the UK-based Multi Asset Team sets out their expected longer-term returns for 20 major asset classes across equity, fixed income, currencies and commodities, discussing the implication of their forecasts for each asset class.

Key Takeaways

  • The strong price performance of equities in 2021 has led to a reduction in expected returns for world markets. Despite this, equity valuations do not look excessive relative to other asset classes
  • Low starting yields for government bonds provide limited room for capital growth, but we still expect a small premium over cash from the additional income
  • To achieve similar returns to history, portfolios may need to look different to prior years, as valuations in core asset classes compel investors to look more widely for returns and diversification