What Will Your Portfolio Return?

State pension funds and investment managers have reached very different conclusions predicting future investment returns

John Rekenthaler 3 June, 2016 | 12:51PM

If you believe investment managers, your portfolio won't be growing much during the next several years. GMO's forecast as of December 2015 shows 0%-2% returns for all assets except emerging market stocks and timber. Over the upcoming decade, Vanguard founder Jack Bogle expects 4%-6% gains on stocks and thus 3%-4% for multi-asset balanced portfolios – minus expenses, as he would point out.

Corporate pension funds are more pesimistic about investment returns than the state pension

Most institutional observers echo that sentiment. For example, looking out 20 years, McKinsey suggests 3% gains on balanced portfolios if economic growth remains sluggish, 5% if developed-markets economies get some spring in their step. Fixed-income prospects are even worse, it reports, "with average annual returns between 300 and 500 basis points" below their averages over the past three decades. The company sombrely concludes that the "golden era has now ended."

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About Author

John Rekenthaler

John Rekenthaler  John Rekenthaler is vice president of research for Morningstar.

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