Investment consultant capital market assumptions on average came in below those made in 2019, even before the onset of the COVID-19 pandemic. Data aggregated by eVestment show that across 12 major asset classes declining return expectations were reported in all but core real estate. Emerging market return expectations had the most significant declines, with equity returns falling 125 basis points and U.S. dollar denominated debt 147 basis points lower.
Of the 11 consultant CMAs surveyed, eVestment noted, only RVK increased its emerging market equity assumptions, 12 basis points higher to 7.26%. RVK was also the only consultant to raise its return assumptions for private equity.
The average inflation target fell to 2.08% from 2.17%.
Despite being made pre-pandemic, these return assumptions reflect views of a mature market that may have reached its peak. In the period since equity markets have fallen more than 30% and record unemployment levels have been reached. Additionally, the impact of stay-at-home orders have driven down demand for many goods and services, including fuel, suppressing global gross domestic product. A few consultants have adjusted their CMAs. However, that data is yet to be released, eVestment noted.
