Fidelity’s Asset Allocation Research Team (AART) believes that asset returns over the next 20 years will be lower than their long-term averages, with stocks outperforming bonds and emerging markets generating the highest returns.

Our capital market assumptions (CMA) framework focuses on the specifics of how economic and financial market inputs influence asset returns over long periods of time. While other approaches assume the connection between GDP growth and asset returns is either perfect or nonexistent, our framework is built on the following beliefs: (1) there is a principal relationship between economic trends and asset-class performance; and (2) by deriving country-specific assumptions, we generate estimates that are global and adaptive across diverse economies and asset categories.

Using this research, we incorporate the core themes of global GDP growth with a deep consideration of the current capital market composition to create forward-looking estimates that may deviate from long-term historical averages.

 

Authors:

Irina Tytell, PhD, Head of Secular Asset Allocation Research, Fidelity Investments
Minfeng Zhu, PhD, CFA, Senior Research Analyst, Fidelity Investments
Dirk Hofschire, CFA, Director of Asset Allocation Research, Fidelity Investments
Jake Weinstein, CFA, Senior Vice President, Asset Allocation Research, Fidelity Investments