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Five-year return forecasts for equities, bonds, currencies and alternatives

Secular Outlook 2025: Five-year return forecasts for equities, bonds, currencies and alternatives

Multi Asset 2 min read
We anticipate that returns across major asset classes will converge over the next five years. As a long-term investor, this presents you with an opportunity to reassess and refine your strategic asset allocation. Our experts share detailed forecasts and actionable recommendations.
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Overview: The Great Convergence

Returns across developed market equities and bonds are converging. This shift marks the end of US exceptionalism and highlights the need for a new approach to portfolio construction.

Key insights:

  • The convergence of returns across asset classes signals a more challenging environment for traditional equity-bond portfolios, with nominal returns expected to be modest.
  • Emerging markets and European stocks are positioned to outperform thanks to a combination of growth-boosting structural reforms and public investment.
  • Investors will need to rethink traditional regional allocations and focus on structural growth to capture alpha in a low-return world
Main findingsImplications
  • Below trend growth & inflation higher for longer
  • Low and convergent real returns in all major asset classes
  • Seek exposure to alpha, not beta
  • Increase fixed-income allocation especially credit while trimming equity exposure.
  • Diversify away from US equities by adding to Europe, emerging markets and non-US champions.
  • Focus on secular growth themes (e.g., IT, Pharma, Industrials, mid-caps), multi-asset strategies, and alternatives like real assets.
Asset class returns, 5-year forecast, %, annualised

Source: Pictet Asset Management, forecast period 31.03.2025- 31.03.2030

Secular Outlook 2025 webinar

Click on the link below to watch chief strategist Luca Paolini and senior multi asset strategist Arun Sai reveal what investors should expect to unfold over the next five years across both the global economy and financial markets.

Download the full investment outlook

Footnote

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The information and data presented in this document are not to be considered as an offer or solicitation to buy, sell or subscribe to any securities or financial instruments or services. The information used in the preparation of this document is based upon sources believed to be reliable, but no representation or warranty is given as to the accuracy or completeness of those sources. Information, opinions and estimates contained in this document reflect a judgment at the original date of publication and are subject to change without notice. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any products or services offered or distributed by Pictet Asset Management. Pictet Asset Management has not ensured the suitability of the securities mentioned in this document for any specific investor, and it should not be relied upon as a substitute for independent judgment; investors are advised to determine the suitability of the investment based on their financial knowledge, experience, goals and situation, or to seek specific advice from an industry professional before making any investment decisions. Investors should read the prospectus or offering memorandum before investing in any Pictet managed funds. Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future. Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and is not guaranteed. Investors may not get back the amount originally invested.