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7-Year Asset Class Real Return Forecasts : As of January 31, 2021

This document forecasts the expected annual real returns over 7 years for various asset classes including stocks, bonds, and cash. U.S. small stocks and emerging market value stocks are expected to have the lowest returns around -7.9% and -6.2% respectively, while U.S. large stocks and international bonds are expected to have moderate negative returns of -1.6% to -2%. U.S. inflation-linked bonds and long-term U.S. government bonds are forecasted to have the highest positive returns of around 5% and 6.5% respectively.

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Ericko Marvin Kweknoto
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63 views1 page

7-Year Asset Class Real Return Forecasts : As of January 31, 2021

This document forecasts the expected annual real returns over 7 years for various asset classes including stocks, bonds, and cash. U.S. small stocks and emerging market value stocks are expected to have the lowest returns around -7.9% and -6.2% respectively, while U.S. large stocks and international bonds are expected to have moderate negative returns of -1.6% to -2%. U.S. inflation-linked bonds and long-term U.S. government bonds are forecasted to have the highest positive returns of around 5% and 6.5% respectively.

Uploaded by

Ericko Marvin Kweknoto
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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7-YEAR ASSET CLASS REAL RETURN FORECASTS*

As of January 31, 2021

STOCKS BONDS

10%
6.5% Long-
8%
term
6% 5.0% Historical
Annual Real Return Over 7 Years

U.S. Equity
4% Return
2%
0%
-2% -0.6% -1.1% -0.8%
-1.6% -2.0%
-4% -3.1%
-3.6%
-6% -4.4%
-6.2%
-8%
-7.9%
-10%
U.S. U.S. Intl Intl Emerging Emerging U.S. Intl Emerging U.S. U.S.
Large Small Large Small Value Bonds Bonds Debt Inflation Cash
Hedged Linked
Bonds

Source: GMO
*The chart represents local, real return forecasts for several asset classes and not for any GMO fund or strategy. These forecasts are forward-looking statements based upon the reasonable beliefs of
GMO and are not a guarantee of future performance. Forward-looking statements speak only as of the date they are made, and GMO assumes no duty to and does not undertake to update forward-looking
statements. Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time. Actual results may differ materially from those anticipated in forward-
looking statements. U.S. inflation is assumed to mean revert to long-term inflation of 2.2% over 15 years.

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