Robeco’s “Coming of Age” explores how elevated valuations and tightening monetary policy could suppress five year asset class returns despite steady economic growth. The paper argues expensive equities and compressed credit spreads left investors facing weaker prospective returns, while emerging markets offered better opportunities.
5 Year Expected Returns 2018 to 2022
Robeco
Research
108 Pages
Key Takeaways
Valuations Limit Upside: Robeco projected developed market equities to return roughly 6.25% annually over 2018 to 2022, below prior cycle expectations due to stretched valuations.
Emerging Markets Favored: Emerging market equities carried expected annual returns near 8%, supported by relatively cheaper valuations and stronger long term growth assumptions.
Credit Risks Rising: High yield spreads rebounded rapidly after the 2015 oil selloff, despite deteriorating credit quality and tighter compensation for risk.
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