Fórum do investidor

A notable characteristic of the sell-off in global stocks and bonds in 2022 was the degree to which both fell together [but]

Although rising interest rates have created near-term pain for fixed income investors, we expect that those with sufficiently long investment horizons will be better off in end-of-period wealth terms by the end of the decade than if they had just realized our return forecast from the end of last year

Against a backdrop of rapidly rising rates, our fixed income return outlook for the next decade (Figure II-5a) is significantly better than last year’s projections, at 4.1%–5.1%, based on more attractive valuations (Figure II-5b)

Even though this isnegative from a short-term, realized-return perspective, it means that the global opportunity set is now more attractive than it was a year ago. Our median forecast for a market-cap-weighted portfolio of U.S. and international equities for the 10-year period from September 30, 2012, to September 30, 2022, was 7.6% per year, and the same portfolio returned 8% over that period. Figures II-8a and II-8b show that the global sell-off is bringing U.S. returns closer to our forecasts from 10 years ago but that international equities have continued to underperform our expectations. Although discrepancies exist at the regional level, our forecast 10 years ago for global equities has proved accurate.11 This underscores the challenges investors face when tilting their portfolio heavily in one direction, and it highlights the benefits of global diversification