• Global equities remain on course for a fourth consecutive double-digit gain in 2026, while government bonds have struggled as yields climbed to multi-year highs. Those higher yields, however, now offer a much stronger starting point for fixed-income returns over the next five years – marking the return of carry.
• Equities still offer the highest absolute returns in our updated five-year outlook. Earnings growth should moderate as the AI investment cycle matures, but amid reasonable valuations should still prove enough to support annual returns of 5.8% for EUR equities and 6.4% for EM, after FX hedging costs. These returns are below historical norms but remain attractive.
• The expected return gap between equities and bonds has narrowed sharply, though. Fixed-income performance should be driven primarily by carry rather than large capital gains or losses, with annual returns in euro terms ranging from 3.6% for Bunds to 4.1% for BTPs. Credit should fare even closer to Equities. Despite tight spreads, carry and subdued corporate default rates should support annual returns of about 4.3% or more for EUR IG and HY Credit. EM sovereign debt may deliver slightly higher returns.

You can now read the full whitepaper at the link below