Don’t expect another roaring ‘20s, even after virus fears fade

This is the first edition of our annual Long-Term Asset Allocation Outlook. It covers the outlook for asset returns over the next decade, and is designed to complement the standard Asset Allocation Outlook, the last edition of which was published in December. While the spread of, and policymakers’ response to, the coronavirus may continue to exert a big influence on asset returns over the next year or two, we don’t assume that it will affect their performance during the rest of this decade. Macroeconomic fundamentals and especially initial valuations are likely to prove much more important. They are the key factors behind our projections that returns from equities will be run-of-the-mill, and that those from bonds will be poor, over the course of the 2020s.