Investment Insights

Ten-Year Capital Markets Assumptions

Ten-Year Capital Markets Assumptions

Calendar Year 2016 | January 2016


Each year, BNY Mellon Investment Management develops capital market return assumptions for approximately 50 asset classes around the world. The assumptions are based on a 10-year investment time horizon and are intended to guide investors in developing their long term strategic asset allocations.

Led by BNY Mellon Fiduciary Solutions, the capital market assumption team consists of more than 30 investment professionals including investment strategists, economists, financial advisors, manager research specialists, and portfolio managers.

We developed the initial baseline assumptions using general market expectations and consensus data. The assumptions were then adjusted to reflect views and potential dislocations in global markets, based on research from across BNY Mellon Investment Management.

This report outlines our forecasts for the next ten years and provides supporting details behind the numbers.


In the U.S., we forecast annualized inflation over the next ten years to be 2.2%, slightly higher than the Federal Reserve target of 2% but in line with consensus forecasts.

The views in this presentation are provided by BNY Mellon Fiduciary Solutions (“Fiduciary Solutions”). This material is not intended, nor should be construed, as an offer or solicitation of services or products or an endorsement thereof in any jurisdiction or in any circumstance that is otherwise unlawful or unauthorized. The results shown are provided for illustrative purposes only and are not to be relied upon as advice, interpreted as a recommendation, or be guarantees of performance.

Fiduciary Solutions is part of The Bank of New York Mellon (“Bank”). In the US, Fiduciary Solutions offers products and services through the Bank, including investment strategies that are developed by affiliated BNY Mellon Investment Management advisory firms and managed by officers of such affiliated firms acting in their capacities as dual officers of the Bank.

BNY Mellon Investment Management is one of the world's leading investment management organizations and one of the top US wealth managers, encompassing BNY Mellon's affiliated investment management firms, wealth management organization and global distribution companies. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and may also be used as a generic term to reference the Corporation as a whole or its various subsidiaries generally. Products and services may be provided under various brand names and in various countries by subsidiaries, affiliates, and joint ventures of The Bank of New York Mellon Corporation where authorized and regulated as required within each jurisdiction.

Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. Also, since the trades have not actually been executed, The results may have under or over compensated for the impact of certain market factors. In addition, hypothetical trading does not involve financial risk. No hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of the trading losses are material factors which can adversely affect the actual trading results. There are numerous other factors related to the economy or markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results, all of which can adversely affect trading results.

The capital market assumptions are The Bank of New York Mellon’s estimates based on historical performance and the current market environment. We do not present the capital market assumptions as actual future performance.

This information has been prepared by The Bank of New York Mellon based on data and information provided by internal and external sources. While we believe the information provided by external sources to be reliable, we do not warrant its accuracy or completeness.

References to future expected returns and performance are not promises or even estimates of actual returns or performance that may be realized, and should not be relied upon. The forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice, interpreted as a recommendation, or be guarantees of performance. In addition, the forecasts are based upon subjective estimates and assumptions about circumstances and events that may not have taken place and may never do so. They have inherent limitations because they are not based on actual transactions, but are based on the historical returns of the selected investments and various assumptions of past and future events. The results do not represent, and are not necessarily indicative of, the results that may be achieved in the future; actual returns may vary significantly. In addition, the historical returns used as a basis for this chart are based on information gathered by The Bank of New York Mellon or from third party sources, and have not been independently verified.

No investment process is risk free and there is no guarantee of profitability; investors may lose all of their investments. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment.

The enclosed material is confidential and not to be reproduced or redistributed in whole or in part without prior written consent of Fiduciary Solutions. The information in this material is only as current as the date indicated, and may be superseded by subsequent market events or for other reasons.

The asset classes are represented by broad-based indices which have been selected because they are well known and are easily recognizable by investors. Indices have limitations because indices have volatility and other material characteristics that may differ from an actual portfolio. For example, investments made for a portfolio may differ significantly in terms of security holdings, industry weightings and asset allocation from those of the index. Accordingly, investment results and volatility of a portfolio may differ from those of the index. Also, the indices noted in this presentation are unmanaged, are not available for direct investment, and are not subject to management fees, transaction costs or other types of expenses that a portfolio may incur. In addition, the performance of the indices reflects reinvestment of dividends and, where applicable, capital gain distributions. Therefore, investors should carefully consider these limitations and differences when evaluating the index performance.

The indices may be trademarks of various organizations and in those cases have been licensed for use by BNY Mellon and are used solely herein for comparative purposes. The foregoing index licensers are not affiliated with BNY Mellon, do not endorse, sponsor, sell or promote the investment strategies mentioned in this presentation and they make no representation regarding advisability of investing in the strategies described herein. Descriptions of the indices are available upon request.