Robeco examines how depressed growth expectations, negative bond yields, and rising debt levels could shape five year asset returns across equities, bonds, and emerging markets. The paper argues extreme pessimism itself may create upside surprises, while still warning that European bonds could deliver -3.5% returns.
Expected Returns 2017-2021
Robeco
Lukas Daalde
Research
120 Pages
Key Takeaways
Bond Market Distortion: AAA European government bonds are projected to return -3.5% over five years as negative yields and ECB policy continue distorting sovereign debt markets.
Emerging Markets Repricing: Emerging market equities are expected to return 7.25%, supported by discounted valuations and currency levels last seen after the Russian ruble crisis.
Growth Expectations Reset: More than 50% of surveyed investors expected low bond yields for decades, reflecting unusually pessimistic assumptions embedded across inflation and asset pricing.
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