Expected 10-year risk premiums across various asset classes are lower than historical premiums, according to data provided by PitchBook. The contraction has been most pronounced in private equity, which had an estimated 5.4% 10-year risk premium as of August, 180 basis points lower than the average of 10-year premiums from 2012 to 2023.
Large-cap equities, small-cap equities and real estate saw their estimated 10-year risk premiums drop by a similar 150 to 160 basis points. Large-cap stocks’ risk premium fell to 2.8% from 4.4%. Small-cap equities and real estate's risk premiums were 3.4% and 2.4%, respectively, each down 150 basis points. Infrastructure’s estimated 10-year risk premium stood at 3.6%, 110 basis points lower than the average since 2012.
