Capital Group Provides Insight Into 2025 Capital Market Forecasts for Investors

Capital Group's 2025 Capital Market Assumptions



On February 13, 2025, Capital Group, a leading player in active investment management, published its Capital Market Assumptions (CMAs) for 2025. These insights reflect the anticipated long-term returns, correlations, and volatilities across major asset classes, providing a 20-year forecast crucial for investors.

Maddi Dessner, the head of asset class services at Capital Group, shared that the firm had revised down its expectations for global equities, indicating the influence of heightened valuations and market concentration witnessed in recent years. Nevertheless, she remained optimistic about the scope for lucrative investment opportunities emerging from both structural and cyclical trends that could arise in the future.

Alexandra Haggard, overseeing asset class services for Europe and Asia, elaborated on the global economic backdrop. She noted the recent geopolitical changes, such as the elections in 64 countries including the EU, which have not diminished the robust growth prospects for the global economy. Factors like increased capital spending, technological advancements from artificial intelligence, and greater digitization trends are expected to play a significant role in driving growth across both developed and emerging markets.

Highlights from the 2025 Capital Market Assumptions



  • - Economic stability: Central banks have made significant headway in managing inflation, contributing to sustained economic growth across developed and developing regions.
  • - Interest rates outlook: Rising interest rates are likely to dominate major markets, buttressed by steady economic expansion.
  • - Currency forecasts: A depreciation of the U.S. dollar against various currencies is anticipated, although the pace of depreciation has been moderated due to differing productivity rates among nations.

Asset Class Return Expectations


The CMAs include specific projections for different asset classes, detailing the expected returns over a 20-year period. Here are some key estimates from the latest report compared to last year’s predictions:

Asset Class 2025 Expected Returns (%) 2024 Expected Returns (%)
---------------------
U.S. Equities 6.3 6.9
Non-U.S. Developed Market Equities 6.0 6.7
Emerging Market Equities 6.8 7.6
U.S. Treasury Intermediate Term 4.0 4.0
U.S. Tips 4.1 4.2
Emerging Markets Debt (USD) 7.0 7.1

Capital Group underscores the importance of these assumptions as foundational inputs for their quantitative models and for guiding their investment strategies.

Conclusion


As of December 31, 2024, Capital Group oversees assets worth over $2.8 trillion, serving a diverse clientele of both individuals and institutional investors globally. Their focus remains on delivering superior investment outcomes by leveraging high-conviction portfolios and thorough research methodologies. To maintain transparency and meet the evolving needs of investors, the firm continuously revises its market outlook.

For those looking to navigate the complexities of the markets, the insights provided by Capital Group will be pivotal in shaping investment strategies and anticipating future trends.

For additional details, visit Capital Group's website.

Topics Financial Services & Investing)

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