Market Update

Capital market assumptions | 2025

December 12, 2024
Invesco
Capital markets assumptions
2025 I Key Takeaways
1

Our current estimate of US equity large capitalization expected returns is now below 5% nominal (4.7% USD) and 3% (2.6%) in real terms, the lowest estimate we have released since we began writing these reports in 2017 and the lowest in our model’s backtest since January 2004. 

2

We posit that the major themes affecting US equity markets are an issue not only for US investors, but for global investors alike and we provide a few ideas on how to diversify US large-cap equity exposures within long-term asset allocations. 

3

From a tactical perspective, we are closely monitoring the possibility of a positive growth shock following the US election, at least for US assets, and will see if our measure of global risk appetite accelerates over the coming months.

Invesco Solutions develops capital market assumptions (CMAs) that provide long-term estimates for the behaviour of major asset classes globally. 

The assumptions, which are based on a 10-year investment time horizon, are intended to guide strategic asset allocations. For each selected asset class, we develop assumptions for expected return, standard deviation of return (volatility) and correlation with other asset classes.

Our CMAs include:
  • Notable changes in our long-term asset class expectations
  • Global and local market commentary
  • Strategic and tactical asset allocation outlooks and investment implications
  • 10-year asset class estimated risk/return attribution analysis

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