Some of the biggest investment firms are projecting very mediocre returns from bonds and stocks over the next seven to 10 years, according to Christine Benz, Morningstar’s director of personal finance.
She reviewed the forecasts of BlackRock, JPMorgan, Research Affiliates, Vanguard and Morningstar Investment Management for U.S., developed markets (excluding the U.S.) and emerging market equities, and for U.S. bonds over the medium term.
In all cases, U.S. equities trailed behind developed and emerging market equities.
JPMorgan and Research Associates were the most optimistic about emerging market equity returns, forecasting nominal gains above 7% annually, as the chart above shows (Vanguard’s forecast also includes developed market equities.)
BlackRock favored European equities over both emerging market and U.S. equities. Morningstar Investment Management forecast higher returns for developed market stocks over emerging market equities, but was the most pessimistic of the five firms for U.S. stocks.
Morningstar forecast a 0.10% decline in U.S. stocks over the medium term. Research Affiliates forecast a 2% gain for U.S. large cap stocks. The remaining three firms forecast yearly gains ranging from about 4% to 5.7%.