Secular Outlook 2025: Five-year return forecasts for equities, bonds, currencies and alternatives
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 findings | Implications |
|---|---|
| Below trend growth & inflation higher for longer | Increase fixed-income allocation especially credit while trimming equity exposure. |
| Low and convergent real returns in all major asset classes | Diversify away from US equities by adding to Europe, emerging markets and non-US champions. |
| Seek exposure to alpha, not beta | Focus on secular growth themes (e.g., IT, Pharma, Industrials, mid-caps), multi-asset strategies, and alternatives like real assets. |
Download the Secular Outlook 2025 Report
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.
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