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Capital market assumptions: 2024

Our 2024 expectations for annualised returns over the next 20 years (what we call our capital market assumptions) are a mixed bag. Strong gains across markets over the past year have tempered our expected returns for equities relative to our 2023 outlook. On the other hand, higher starting yields translate into improved expectations versus last year across many fixed income asset classes.


Returns poised to shift in 2024 

Investors have largely priced out recession scenarios

Past results are not predictive of results in future periods. 2024 estimates as of 31 December, 2023, with valuations as of September 2023. 2023 estimates as of 31 December, 2022, with valuations as of September 2022. Returns in USD terms. Source: Capital Group

US equity return expectations are tempered by high valuations that leave little room for further expansion. Meanwhile, Europe (including UK) and Japanese equities have better valuation support and higher dividend yields relative to the US but with the dollar depreciating anywhere from 4% to 7% this past year, we see less of a tailwind from a weaker dollar. While our assumptions for emerging markets equities remain high, we have reduced our overall growth expectations, primarily due to growing concerns around China.


In fixed income, we have raised our expected returns across many areas, primarily driven by those higher starting yields. Globally, central banks have made progress toward mitigating and reversing inflationary trends. Moreover, debt sustainability is a real concern and will require lower rates in the US and other major economies.


Overall, the outlook is still bright for long-term investors and bonds are now better poised to play their role as a diversifier in overall portfolios.



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Past results are not a guarantee of future results. The value of investments and income from them can go down as well as up and you may lose some or all of your initial investment. This information is not intended to provide investment, tax or other advice, or to be a solicitation to buy or sell any securities.

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. All information is as at the date indicated unless otherwise stated. Some information may have been obtained from third parties, and as such the reliability of that information is not guaranteed.