Long-Term Capital Market Assumptions 2024

by Michael Halloran
January 17, 2024
This report establishes our long-term return assumptions across major asset classes and includes representative model portfolios.

After 2022’s selloff in both stocks and bonds, the 2023 edition of ISG’s Long-Term Capital Market (LTCM) Assumptions saw significant upward revisions to both long-term stock and bond returns. With 2023’s strong rally in stocks, valuation is now above historical averages and suggests muted stock returns in the future. While off historically high levels, elevated corporate profit margins remain a potential headwind for future stock market returns.

However, with cash yielding over 5.0% and the 10-year Treasury trading in line with our long-term estimate, cash and bonds are in a position to provide meaningful return additions to portfolios.

In total, the 2024 update of our long-term outlook calls for similar returns across most asset classes relative to 2023. Due to higher cash and bond yields, this outlook is well above the previous decades’ call for muted returns. However, expected lower potential economic growth rates due to aging demographics and a slow-growing labor force, still present headwinds for future returns.

ISG’s projections suggest reasonable return assumptions of 7% - 8% for an all-equity portfolio, and 6% - 7% for a balanced 60% stock and 40% bond portfolio.

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This presentation has been prepared by Janney Investment Strategy Group (ISG) and is to be used for informational purposes only. In no event should it be construed as a solicitation or offer to purchase or sell a security. Past performance is no guarantee of future performance and future returns are not guaranteed. There are risks associated with investing in stocks such as a loss of original capital or a decrease in the value of your investment. For additional information or questions, please consult with your Financial Advisor.

About the author

Michael Halloran

Equity Strategist

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