FN Marktrapporten

Expected returns 2021-2025 - A brave new world

It’s as if nothing happened. At the time of writing, the MSCI AC World index in EUR is up 8% since a year ago, which is very close to our long-term equilibrium equity return estimate of 7%. Yet, in the interim period, when the global economy was first confronted with Covid-19, we experienced the most significant US GDP contraction since the third quarter of 1932 and the deepest global recession since the 1930s. To overcome the crisis, we believe investors need to understand, now more than ever, that ultra-low interest rates are a key feature of the current investment landscape. We foresee a protracted period of negative real interest rates, meaning their impact on the relationship between economic fundamentals and asset price performance, and the consequences for multi-asset allocation, will be critical. We are living in a time of radical transition, and volatility in markets will remain elevated.