Long-term return assumptions are markedly lower across major asset classes relative to 2016 according to J.P. Morgan's 2017 capital market assumptions. The returns represent 10- to 15-year annualized return estimates compiled by experts across the firm that are ultimately aggregated and vetted by senior leaders for their reasonability, and to ensure consistency among asset classes.
Factors impacting the 2017 assumptions were continued low economic growth, aging population demographics and the impact of low interest rates on equity risk premiums. Real GDP expectations for 2017 were lower in the U.S., eurozone and emerging markets, with the only expected increase to be in Australia.
Real assets -- real estate, commodities and gold -- are a bright spot with return assumptions remaining stable or slightly higher. Private equity assumed returns declined 50 basis points from 2016, but remains the most attractive asset class with an 8% assumed long-term return.