Capital Market Assumptions: A Comprehensive Global Approach for the Next 20 Years

By: Irina Tytell, Minfeng Zhu, Dirk Hofschire, Anna Srapionyan

Capital market assumptions: A comprehensive global approach for the next 20 years

We believe that asset returns over the next 20 years will be lower than their long-term averages, with stocks outperforming bonds and emerging markets generating the highest returns.

Key Takeaways

• Our secular return expectation for U.S. equities is below the long-term average due to lower growth potential and higher starting valuations.
• Our fixed income return expectations are near the long-term average, reflecting the broad alignment of starting bond yields with our secular views.
• As a result, we continue to expect U.S. stocks to outperform bonds, but by a smaller margin relative to history.
• We expect non-U.S. equity returns, especially in emerging markets, to exceed those of the U.S. while remaining lower than their respective long-term averages.
• Our capital market assumptions can help inform strategic asset allocation decisions by focusing on how economic and financial market inputs influence asset returns over long periods of time.

Our capital market assumptions framework focuses on the specifics of how economic and financial market inputs influence asset returns over long periods of time. While other approaches assume the connection between GDP growth and asset returns is either perfect or non-existent, our framework is built on two beliefs:

1. There is a principal relationship between economic trends and asset-class performance.
2. By deriving country-specific assumptions, we generate estimates that are global and adaptive across diverse economies and asset categories.

Image

For illustrative purposes only. Source: Fidelity Investments (AART).

Read More From Fidelity Investments

Past performance is no guarantee of future results.

These materials contain statements that are "forward-looking statements," which are based upon certain assumptions of future events. Actual events are difficult to predict and may differ from those assumed. There can be no assurance that forward-looking statements will materialize or that actual returns or results will not be materially different than those presented.

Information presented herein is for discussion and illustrative purposes only and is not a recommendation or an offer or a solicitation to buy or sell any securities. Views expressed are as of 8/28/25, based on the information available at that time, and may change based on market and other conditions. Unless otherwise noted, the opinions provided are those of the authors and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.

For important information, see the full linked content.
1002806.6
14A502CF1173427C850ACCC29C1BCBDA

Past performance is no guarantee of future results.

This information is intended for the sole use of institutional investors. Retail investors and any other persons who are not institutional investors should not act or rely on this information.

Unless otherwise expressly disclosed to you in writing, the information provided in this material is for educational purposes only. Any viewpoints expressed by Fidelity are not intended to be used as a primary basis for your investment decisions and are based on facts and circumstances at the point in time they are made and are not particular to you. Accordingly, nothing in this material constitutes impartial investment advice or advice in a fiduciary capacity, as defined or under the Employee Retirement Income Security Act of 1974 or the Internal Revenue Code of 1986, both as amended. Fidelity and its representatives may have a conflict of interest in the products or services mentioned in this material because they have a financial interest in the products or services and may receive compensation, directly or indirectly, in connection with the management, distribution, and/or servicing of these products or services, including Fidelity funds, certain third-party funds and products, and certain investment services. Before making any investment decisions, you should take into account all of the particular facts and circumstances of your or your client’s individual situation and reach out to an investment professional, if applicable.

Registered investment products (including mutual funds and ETFs) and collective investment trusts managed by Fidelity Management Trust Company (FMTC) are offered by Fidelity Distributors Company LLC (FDC LLC), a registered broker-dealer. Fidelity Institutional Asset Management (FIAM) investment management services and products are managed by the Fidelity Investments companies of FIAM LLC, a U.S. registered investment adviser, or Fidelity Institutional Asset Management Trust Company, a New Hampshire trust company. FIAM products and services may be presented by FDC LLC, a non-exclusive financial intermediary affiliated with FIAM and compensated for such services.