1. MULTI ASSET LONG-TERM RETURN EXPECTATIONS

  2. All investment strategies have the potential for profit and loss, your or your clients’ capital may be at risk

  3. Summary

    This short summary of our Long-Term Return Expectations paper sets out the Multi Asset team’s views, as at 31 December 2019, on the prospective returns for asset classes over cash over the next 10 years and beyond.

    While we expect growth over the next 10 years to be lower than previous decades, we believe many of the market concerns in recent months are the result of transient rather than enduring factors. For example, we continue to reject the deeply gloomy expectations of bond markets, which anticipate that policy rates in much of the developed world will remain well below neutral levels for a prolonged period.

    Following China and the United States signing the first part of a trade agreement, as we entered 2020, we saw numerous economic metrics ticking up and financial conditions at their easiest level in decades. We do, however, recognise rising corporate leverage and falling margins.

    We believe current market pricing reflects too pessimistic a view of the likely path of the global economy over the next 10 years, and our central economic case continues to be one of moderate global growth.

     

    Our Long–Term Return Expectations

    Expected returns for cash*: 2.00% over next 10 years, 2.75% over the long term.*

    *UK Bank of England.
    Note: Baillie Gifford estimates for asset class returns as at 31 December 2019. Expected returns are passive and do not take into account potential alpha.
    We view these return estimates as broadly sensible indications of likely returns. They should not be interpreted as high precision forecasts nor are they likely to bear much resemblance to returns over shorter time horizons.

     

    The following are key highlights from our latest Long-Term Returns exercise. View the full report.

     

     

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  5. RISK FACTORS

    The views expressed in this article are those of Baillie Gifford’s Multi Asset Team and should not be considered as advice or a recommendation to buy, sell or hold a particular investment. They reflect personal opinion and should not be taken as statements of fact nor should any reliance be placed on them when making investment decisions. This communication was produced and approved on the stated date and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.

    Potential for Profit and Loss

    All investment strategies have the potential for profit and loss, your or your clients’ capital may be at risk. Past performance is not a guide to future returns.

    Stock Examples

    Any stock examples and images used in this article are not intended to represent recommendations to buy or sell, neither is it implied that they will prove profitable in the future. It is not known whether they will feature in any future portfolio produced by us. Any individual examples will represent only a small part of the overall portfolio and are inserted purely to help illustrate our investment style.

    This article contains information on investments which does not constitute independent research. Accordingly, it is not subject to the protections afforded to independent research and Baillie Gifford and its staff may have dealt in the investments concerned. All information is sourced from Baillie Gifford & Co and is current unless otherwise stated. The images used in this article are for illustrative purposes only.

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