Schroders has issued updated long-term forecasts highlighting where it believes the best return prospects sit over the next 10 years across regions and asset classes.
Schroders has highlighted a wide divergence in expected returns across global markets over the coming decade, releasing its 2026–2035 capital market forecasts that show substantial variation between regions, sectors and asset classes.
The projections, updated twice yearly, underpin the firm’s strategic asset allocation modelling and offer a detailed view of how different parts of the market may perform over a 10-year horizon.
The analysis pointed to a low but steady profile for cash returns, with annual forecasts of 2.6 per cent in the US, 1.7 per cent in Europe, 3.4 per cent in the UK and 1.2 per cent in Japan.
These estimates were derived using government bond yields and term premiums calculated from yield curve data since 2000.
Government bond expectations also varied, guided by the long-established relationship between starting yields and subsequent 10-year returns.
Schroders forecast 3.9 per cent annual returns for US government bonds, 3.0 per cent for Europe, 4.4 per cent for the UK, 1.7 per cent for Japan and a higher 5.9 per cent for emerging markets, reflecting elevated yields in developing economies.
Inflation-linked bonds displayed a stronger return profile, with forecasts of 4.3 per cent in the US and 4.6 per cent in the UK, based on an adjusted methodology that accounts for historical distortions in linkers markets.
Credit markets showed further divergence, with investment grade bonds expected to return between 3.7 per cent and 4.9 per cent across major regions, while US high-yield debt was forecast at 5.2 per cent and European high-yield at 4.8 per cent.
Emerging market debt stood out again, estimated at 5.4 per cent over the decade.
Equities exhibited some of the widest differences as Schroders projected global equities to return 5.2 per cent annually but with substantial regional dispersions.
For European equities, these reported the lowest returns at 4.9 per cent but emerging markets could see as much as 9 per cent.
It also forecast returns of 5.2 per cent in the US, 8.3 per cent in Japan and 8.8 per cent in the UK.
The forecasts incorporated long-term equity risk premia and valuation adjustments based on CAPE ratios.
Alternatives presented another layer of separation with commodities forecast at 4.3 per cent, REITs at 7 per cent and hedge funds at 5.8 per cent, using long-run excess returns and adjusted historical patterns.
Schroders also published corresponding volatility forecasts, with global equity volatility expected at 14.5 per cent and US government bonds at 6.5 per cent.
Meanwhile, Goldman Sachs’ 2026 outlook contrasted the long-term assumptions with a far stronger near-term view for equities.
The firm forecast global equities to return 11 per cent over the next 12 months, including dividends, supported by earnings growth and a continued expansion in the world economy.
“Given this macro backdrop, it would be unusual to see a significant equity setback/bear market without a recession, even from elevated valuations,” Peter Oppenheimer wrote in its Global Equity Strategy 2026 Outlook: Tech Tonic—a Broadening Bull Market.
The outlook sees the S&P 500 deliver a price return of 9 per cent and an 11 per cent total return, while the STOXX 600 is expected to deliver a 3 per cent price return and a 7 per cent total return (13 per cent in USD).
Additionally, TOPIX and the MSCI AP ex Japan are expected to deliver price returns of 2 per cent and 10 per cent, and total returns of 4 per cent and 12 per cent, respectively.
Goldman highlighted that valuations across all major regions were already historically high after sharp gains in 2025, meaning 2026 returns were likely to be “driven more by fundamental profit growth rather than by rising valuations”. Its analysts expected equity prices to climb 9 per cent and return 11 per cent with dividends, “most of these returns… earnings-driven”.
