Investors face bleak returns for the next decade
Over the next decade, low growth, low inflation and low yields could push returns for the classic US portfolio — 60% stocks and 40% bonds — down toward their lowest point in a century. That’s right: a century.
Strategists at Morgan Stanley see US stocks and US Treasuries returning 4.9% and 2.1% each year during that timeframe, according to research published this weekend. The traditional US portfolio would therefore return just 2.8% annually — half the average performance over the past 20 years.
“Investors will need to accept much higher volatility to eke out small incremental units of return,” strategists including Serena Tang, executive director of cross-asset strategy, told clients. Investors will likely opt for fewer government bonds, favoring high-quality credit instead.