Capital market assumptions Q3 2018

Latest updates to the Invesco Global Solutions team’s long-term asset class forecasts

Aug 23, 2018 | Mark Humphreys

Invesco Global Solutions develops capital market assumptions (CMAs) that provide long-term forecasts for the behaviour of major asset classes globally. The team is dedicated to designing outcome-oriented, multi-asset portfolios that meet the specific goals of investors. The assumptions, which are based on a 10-year investment time horizon, are intended to guide these strategic asset class allocations.

For each selected asset class, we develop assumptions for expected return, standard deviation of return (volatility) and correlation with other asset classes.

In its latest quarterly update, Invesco Global Solutions believes that return expectations for equity have improved in the UK and Eurozone but have reduced in the US. Relative to Q3 2017, return expectations for fixed income are broadly unchanged or improved slightly, except for US municipals and bank loans. As for commodities, return forecasts have risen, driven by rising interest rates on cash and increased inflation expectations.

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