Ninety One’s Capital Market Assumptions framework focuses on the key drivers of long-term performance. We do this to better understand possible future returns, enriching discussions with our clients.
Our framework emphasises income payments across asset classes, as they are both readily measured and pivotal in determining returns. In addition, long-term history is available, and income is less subject to manipulation than accounting metrics.
We divide returns into three components. The first – income – is a tangible, known entity, but the others are subject to material misestimation:
| 1 | Income Yield is historically the single most important explanatory factor for income-generating assets |
| 2 | Growth The extent to which income is expected to change over time |
| 3 | Revaluation The price per unit of income likely to apply at the end of the period (typically, 10 years) |
Six months ago, the global economy was in a rare Goldilocks phase, with growth accelerating across major regions and inflation gradually subsiding. The US tariff shock had proved largely manageable, and AI was already boosting growth through a sustained capital investment cycle.
That benign phase did not last. Since then, investors have had to contend with war in the Middle East, unprecedented disruption to global crude oil and natural gas flows, a wave of defaults and investor outflows from private credit portfolios and a reassessment of the downside risks associated with AI innovation.
Each of these developments has been a significant source of uncertainty and volatility. Prices for crude oil and distilled products doubled and, in some cases, tripled. The average software stock fell by a third, while the prices of publicly traded vehicles exposed to private credit imply an average impairment of 20% in the value of the predominantly senior secured loans held in these portfolios.
For all this, the impact on broad asset markets has been relatively muted. Bond yields have risen as expectations of interest rate cuts have given way to a renewed hiking cycle. Credit spreads have widened moderately and equity valuations have derated slightly, but none of these moves has materially altered the overall picture of muted expected returns.
We anticipate that a traditional 60% global equity, 40% global government bond portfolio, hedged into US dollars, will deliver an annualised nominal return of 3.9% over the next decade. That outcome would place it just above the bottom decile of historic 10-year returns.
We continue to see considerable scope for value-add through asset allocation and security selection.
Forecasts are inherently limited and modelling involves risks, assumptions and uncertainties, they are forward looking and are not guarantees nor a reliable indicator of future results. Actual returns could be materially higher or lower than projected. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance.
Source: Ninety One proprietary Capital Market Assumptions as at 31 March 2026. These estimates are gross of fees (returns can be reduced by management fees and other expenses incurred) and reflect the view of Ninety One’s multi-asset team, whilst the views of other teams across Ninety One may differ. Details on our Capital Market Assumptions methodology available upon request.
General risks. Forecasts are inherently limited and modelling involves risks, assumptions and uncertainties, they are forward looking and are not guarantees nor a reliable indicator of future results. Actual returns could be materially higher or lower than projected. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. The value of investments, and any income generated from them, can fall as well as rise. Costs and charges will reduce the current and future value of investments. Where charges are taken from capital, this may constrain future growth. Past performance is not a reliable indicator of future results. If any currency differs from the investor's home currency, returns may increase or decrease as a result of currency fluctuations. Investment objectives and performance targets are subject to change and may not necessarily be achieved, losses may be made. Environmental, social or governance related risk events or factors, if they occur, could cause a negative impact on the value of investments.
