Emerging Market Equities To Offer Highest Forecasted Returns, Ahead of Europe, US – DWS

Amanda Cheesley Deputy Editor April 9, 2024

Emerging Market Equities To Offer Highest Forecasted Returns, Ahead of Europe, US – DWS

The DWS Research Institute has just released its latest "Long View 2024" report, featuring its long-term forecasts for major asset classes for 2024.

Return forecasts across equities have significantly increased from last year’s forecasts, according to a report by DWS Research Institute. In Europe and emerging markets, they are now in line with or modestly above the realized returns over the past decade, whereas US equities are still below the strong realized returns seen over the past 10 years, the report shows.

Across regional equity markets, emerging markets are expected to offer the highest forecasted returns, but only marginally ahead of some European markets and the US, the report states.

Fixed income return forecasts show the most positive change, both versus the previous year’s forecasts and relative to the previous decade, the report adds. Both core fixed income and credit offer higher nominal return outlooks, given high current starting yield levels, the report reveals.

Within credit, across investment grade and high yield corporates as well as sovereign and corporate emerging market debt, return forecasts are well above previous decade returns, the firm continued. Emerging market US dollar sovereign and corporate debt in particular are the highest across credit asset classes, the report shows.

Alternative asset class return forecasts are also in line with to modestly below traditional asset class forecasts, the firm said. Within alternatives, infrastructure equity has the highest return outlook. A decline in private real estate equity forecasts reflect both a methodology change to earnings' contribution but more importantly less attractive valuations relative to treasury inflation-protected securities (TIPS) yields, the firm continued.

Commodity future return forecasts are healthier now than the very poor realized returns of the previous decade, and could provide useful diversification benefits and potential inflation protection, the firm said.

The DWS Research Institute provides insights, powered by experts across German asset manager DWS as well as academia, industry and think tanks. This latest report was compiled by Jason Chen, senior portfolio strategist, Dirk Schluter. co-head DWS house of data and US economist Christian Scherrmann.

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