Where this $2trn giant says returns are heading in the next five years

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T. Rowe Price says investors will need to lower their expectations and take more risk with ugly fixed income returns set to smash balanced portfolios.

Thomas Poullaouec, head of multi-asset solutions for Asia Pacific at the $2 trillion investment giant T. Rowe Price, has a grim message about the next five years for investors who have relied on aInvestors are sailing into a period of rougher waters, according to T. Rowe Price.T. Rowe Price’s latest capital market assumptions point to a difficult five years ahead.

Global equities are tipped to deliver an annualised return of 6 per cent over the next five years. But again, investors will need to radically adjust any expectations the last decade has left them with: the global equity returns seen in the five years to 2021 and 2016 of 14.8 per cent and 17.9 per cent look unlikely to be repeated.If there’s one slice of good news for Australian investors it is that the ASX should outperform the pack, with T. Rowe Price forecasting annualised returns of 6.

There are essentially two ways investors can respond: lowering their return expectations or being prepared to take on more risk to generate more alpha, which Poullaouec says becomes vital in a period of low returns. Poullaouec also says investors will need to stay nimble, and be much more active in the way they manage their portfolios.

 

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