by Callum Thomas
It’s easy to get fixated on the short-term gyrations and the incessant noise/news flow, so here’s a trio of timely charts to give you some longer-term perspective.
Editors note: When planning an asset allocation for a portfolio over a longer term (5 years or more) looking at what has happened in the recent past or is happening currently can be quite unproductive. This article gives an assessment of what might happen going forward for several years.
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Expected real returns:
- Growth assets are expected to outperform fixed income; within fixed income return has to be found in the riskier end of the spectrum; within growth it’s commodities and global ex-US that are set to outperform.
Commodities vs Equities:
- The 100yr+ chart shows commodities at the low end of the range vs equities (mean reversion time?).
Global Equities vs Global Bonds:
- After a 20yr slog, global equities have finally broken out to a new all time high relative to global bonds; I’d expect that trend to continue (but with greater emphasis on the *global* part of global equities).
Should be an interesting next decade in asset allocation!
Contents of this have also been posted at LinkedIn and at Topdown Charts.
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