2020 Capital Market Assumptions

We expect that the next ten-year period will be characterized by returns below historical averages, to varying degrees across all asset classes.

Executive Summary

Our 2020 Capital Market Assumptions details our research on asset class returns, standard deviations of returns and correlations over the 2020–2029 timeframe. These estimates are a key input into our strategic asset allocation process for our multi-asset portfolios; they also provide a context for evaluation of the macroeconomic inputs that support the return estimates.

We expect that the next ten-year period will be characterized by returns below historical averages, to varying degrees across all asset classes. Our current forecast is for U.S. and international developed market equities to produce low single-digit returns, which are similar to what was forecasted last year.

The macro inputs of an historically low potential GDP growth trajectory, slow labor supply growth and an economy laboring to exit a shallow productivity regime inform our forecasts. To combat utilizing a single point estimate forecast, we incorporate an alternate scenario into our methodology. This step delivers a holistic approach to our macro inputs, which produces blended estimates. Each year the asset allocation team determines through its research process if the alternative scenario is to have slightly better or worse macro inputs. This year we again used marginally higher productivity and profit share inputs for the alternative case scenario.

In most cases, expected risk-adjusted returns for international developed market assets are lower than those for comparable U.S. assets. This partially reflects better U.S. growth prospects and some momentum bias inherent in our forecasting models. Expected returns for emerging market equities are above U.S. large-cap returns and are equal in Sharpe ratio (risk-adjusted) terms.

Our bond return assumptions imply that returns generally will be in the low single digits. We note that our projections do assume that moves in both bond term premiums and real interest rate premiums will cap the upside returns available to fixed income assets.


Past performance does not guarantee future results.

This commentary has been prepared by Voya Investment Management for informational purposes. Nothing contained herein should be construed as (i) an offer to sell or solicitation of an offer to buy any security or (ii) a recommendation as to the advisability of investing in, purchasing or selling any security. Any opinions expressed herein reflect our judgment and are subject to change. Certain of the statements contained herein are statements of future expectations and other forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (1) general economic conditions, (2) performance of financial markets, (3) interest rate levels, (4) increasing levels of loan defaults, (5) changes in laws and regulations, and (6) changes in the policies of governments and/or regulatory authorities.

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