In focus

30-year return forecasts: 2019 update

Craig Botham

Craig Botham

Senior Emerging Markets Economist

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Our forecasts suggest that the long run real returns on cash remain poor, with negative returns still on offer in Japan. The US and some Asian markets do offer a positive return, but even risk averse investors might shy away from a maximum return of 0.6% per annum.

We would expect longer dated sovereign debt to outperform cash over thirty years, but returns in real terms are still likely to be disappointing, and Japan still fails to deliver a positive return. The current valuations of bonds considered "safe assets" are unattractive and suggest low returns.

Our forecasts would still suggest credit, property and equities will outperform sovereign bonds, as might be hoped. Equities remain the asset class offering the greatest potential for returns. UK small cap equities, followed by emerging markets and Pacific ex Japan, offer the highest returns.

Emerging market equities, however, are more prone to periods of crisis than their developed peers, and we would expect the more generous potential return to compensate greater volatility and sharper drawdowns. 

Our full analysis can be found as a PDF at the link below

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30-year return forecasts - 2019-48 16 pages | 464 kb