With the ongoing war in Ukraine and the fragile ceasefire in the Middle East, uncertainty has persisted and indeed has increased following President Trump’s inauguration. The ensuing onslaught of tariffs and other unorthodox policies will continue to represent a challenge to the established world order. Economic historians may well look back and determine that 2025 was a watershed year.
It is therefore surprising how well the global economy and world stock markets have held up despite the ongoing turmoil. One reason is that central banks have, to varying degrees, continued to ease policy and that has helped to support investor sentiment, economic activity and corporate profits. A second reason relates to the investor pessimism that was prevalent at the start of 2025 and that peaked following the shock tariff announcement in early April. Fears concerning the impact of tariffs have proven to be premature and overly exaggerated, which has meant that many investors spent much of the year underweight to risk assets. As equities have continued their inexorable rise, the pain of being underweight and the fear of missing out sucked in new investors every time the market tried to sell off.
Whilst such factors are more short term in nature, they are nonetheless important for the longer-term view. The higher valuations evident in some parts of the world that have resulted from 2025’s good performance, impacts the 10-year outlook because higher valuations tend to lower future expected returns. That is reflected in this year’s CMAs notably for the US, the UK, Japan and some emerging markets. The broad themes of de-globalisation leading to a multi-polar global trade network, increased defence spending, budget challenges and heightened geopolitical tension will, we believe, remain relevant.
Finding the right asset allocation for an investor therefore remains critical to achieving long-term investment goals. Our CMAs are an important part of this process, helping to build and define robust strategies in line with your risk appetite. As such, we set out our long-term return expectations across a broad range of markets and asset classes:
- Equity market assumptions
- Fixed income assumptions
- Currency and Commodity assumptions
- Private Market assumptions
- Hedge Funds assumptions
We hope that this CMA document provides you with a framework to help you navigate and fulfil your long-term investment goals. Please do also refer to our Outlook 2026 to delve deeper into some of these enduring themes.
Download the full edition of our Capital Market Assumptions publication here
Please also find a link to EFG’s Outlook 2026 here