Long-term strategic outlook

[ "" ]
[ "Market Outlook" ]
[ ]

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

Key Takeaways
  • Five-year forecasts for most asset classes are lower relative to their level in January 2024.

 

  • For equities, the main driver in lower returns is a forecasted hit to P/E values, particularly for U.S. For fixed income, yields have come down since their peaking at the start of Q4 2023 and have been the main driver for lower forecasted returns.

 

  • A stickier than expected inflationary environment and rising cash yields have lifted the outlook for returns available in commodity markets.

 

  • Credit spreads remain tight and have retreated year to date, which has generally lowered their forecasted five-year returns alongside nearly unchanged fundamentals.

Forecasted five-year total average returns (%)*

Source: Columbia Threadneedle Investments as of 06/15/24. Past performance does not guarantee future results. 
 

Strategic outlook: Our growth and inflation expectations have not changed significantly since our last update and are provided below:

 

  • Consensus estimates on U.S. and global growth for the rest of 2024 are higher and recession risks have diminished. Growth expectations for the forecast period indicate a rebound in developed markets, while emerging markets are expected to decline.

 

  • Inflation is expected to continue falling towards longer term averages for both developed and emerging markets.