Bridgewater Associates examines how elevated global wealth relative to income constrains future investment returns, arguing that financial assets ultimately represent claims on future income. The piece challenges assumptions of historical returns persisting, suggesting achieving them may require materially higher inflation or productivity growth.
Understanding The High Returns in a Low Return Environment
Bridgewater
Greg Jensen
Research
4 Pages
Key Takeaways
Wealth Income Imbalance: Financial assets could approach nearly 500% of GDP under a 7% return scenario, far exceeding income growth needed to service those claims.
Return Expectations Reset: Expected returns across major asset classes have declined from roughly 10% pre-2009 to closer to 4% in the post-crisis environment.
Risk Curve Shift Impact: Since 2009, capital moving out of cash into risk assets compressed yields by several percentage points, reducing forward-looking return potential.
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