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2024 long-term annualized capital market expected returns

How long-term return expectations can help guide strategic asset allocation.

Éric Morin, Michael Sager, Francis Thivierge and Luc de la Durantaye Apr. 22, 2024 2-minute read

Each year, CIBC’s Multi-Asset and Currency Management team develops long-term return and volatility expectations for a broad set of asset classes, in collaboration with our Total Investment Solutions team. These expectations are the cornerstone of our firm’s strategic asset allocation thought leadership and client advisory services.

Key takeaways

The factors that determine the balance between investment spending and savings are shifting, with important implications for expected asset class returns. We expect the next 10 years to be characterized by strong investment tailwinds, driven by geopolitical risks, strong technology demand, the energy transition and elevated infrastructure needs. At the same time, the supply of savings is expected to slow due to an ageing population and, particularly in the U.S., persistent fiscal deficits.
Reflecting strong investment demand, we expect economic growth in the next 10 years to be slightly above the historical average of the past 20 years in several countries. This should result in positive output gaps and average inflation that is slightly higher than central bank policy targets.
Our economic outlook projects higher bond yields than were common during the 2010s, back to levels closer to those experienced in the 2000s. We expect the 10-year U.S. Treasury yield to average 4.1%. Higher equilibrium yields are consistent with more attractive expected returns on government bonds. We also expect returns on corporate, high-yield and emerging markets (EM) bonds to be proportionately higher.

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Written by

Éric Morin

Senior Research Analyst

Multi-Asset and Currency Management

Michael Sager, Ph.D.

Managing Director and Head

Multi-Asset and Currency Management

Francis Thivierge, M.Sc., CFA

Senior Portfolio Manager

Multi-Asset and Currency Management

Luc de la Durantaye

Vice Chair

CIBC Asset Management

2024 long-term annualized capital market expected returns

Key takeaways

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