Press release
Northern Trust’s 5-Year Forecast Sees Global Private Equity Leading 5-Year Annualized Returns; Global High Yield and U.K. Equities to Lead Among Bonds and Stocks
Backdrop of Slower Growth Expected CHICAGO & LONDON--(BUSINESS WIRE)-- Northern Trust’s Capital Market Assumptions (CMA) Report, a multi-asset class,
About this update from Northern Trust Corporation
[{"type":"text","content":"\nBackdrop of Slower Growth Expected\n\n CHICAGO & LONDON--(BUSINESS WIRE)--\nNorthern Trust’s Capital Market Assumptions (CMA) Report, a multi-asset class, five-year investment outlook updated annually, expects global private equity to lead five-year annualized returns at 9.6%. Global high yield and U.K. equities are expected to lead bond and stock returns, at 7.5% each. Returns are expected to be within a global growth environment that slows to 2.6% annually.\n\nRooted in Northern Trust’s deep capital market analysis, the CMA Report informs the investment decisions and asset allocation recommendations made by the firm, which, as of June 30, 2022, had US$1.3 trillion in assets under management. Forecasts are created using Northern Trust’s “forward-looking, historically aware process,” where historical returns and relationships are subjected to the firm’s forward-looking themes that distinguish the CMA Report every year. This year’s Report includes six themes:\n\n\nSlow Growth Transitions: Newly affecting the global economy are the slow transitions, including pandemic to endemic; globalization to regionalization; and fossil fuels to renewables. They represent economic challenges for a global economy already facing debt and demographic headwinds. Those transitions will likely lead to continued slow growth.\n“In our view, investors will see the past two years’ stimulus-boosted growth reverting to the previous slow form,” said Chris Shipley, Northern Trust Asset Management’s chief investment strategist for North America. “Our 1.9% U.S. forecast marks a slowdown from the past five years but is still ahead of most other advanced economies. On top of that, our 3.7% China forecast also marks a slowdown from the past five years.”\n\n\n\nInflation Recalibration: Automation and digitization are still impactful disinflationary forces, but can take time to overcome the recent shocks of stressed global supply chains, tight commodity markets and depressed labor supply. Recalibration will likely take much of the five-year horizon.\n“While we expect inflation to take time to move back toward central banks’ targets, we do believe the worst has passed,” said Wouter Sturkenboom, Northern Trust Asset Management’s chief investment strategist for Europe, the Middle East, Africa, and the Asia-Pacific region. “The ‘Stuckflation’ regime is over, replace...