Friday, April 20, 2012

GMO 7-Year Asset Class Forecasts - March 2012

GMO has just released its quarterly 7-year Asset Class Forecasts and here are the expected annualized return (based on valuation and historical earning growth):

  • US Large caps: -0.3% per year
  • US Small caps: -2% per year
  • US High Quality: 3.7% per year
  • International Large caps: 3.9% per year
  • International Small caps: 3.4% per year
  • Emerging Markets: 5.4% per year
This last month expected returns have gone down for US stocks and International large caps and up slightly for international small caps and emerging markets, but the returns are still nothing to be excited about.

Different kinds of bonds are expected to return between -2.2% and 1.0% per year.
Managed Timber (stable as ever) is expected to return 6.5% per year. Those are real returns adjusted for inflation of 2.5% per year.

You can receive GMO's forecasts (monthly) and the quarterly newsletter for free by registering at

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