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Stock Market Predictions: What Type of Returns Can Investors Expect Over the Next 10 Years?


  • The oldest U.S. bank, BNY Mellon, has released updated projections for the 10-year annualized returns of nearly 50 different asset classes.
  • BNY Mellon is even more bullish now, raising its expected returns for U.S. equities, bonds, hedge funds and private equities over the next decade.
  • The bank believes technological innovations and a perceived higher interest rate environment will produce higher returns.
stock market predictions - Stock Market Predictions: What Type of Returns Can Investors Expect Over the Next 10 Years?

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The next decade may end up being even more profitable for investors than previously expected, according to recently released stock market predictions from Bank of New York Mellon (or BNY Mellon). Indeed, the investment banking company has released its updated forecasts for stocks, bonds and more over the next 10 years — and by and large, they’re bullish.

With the United States on the verge of a number of industry-changing technological developments — including and especially artificial intelligence (AI) — BNY Mellon believes “U.S. equities will be first in line to harness the productivity-enhancing benefits of the new technology.”

In the 30-page report, BNY Mellon dives deep into its updated projected annualized returns across nearly 50 asset classes. Interestingly, many of its upside changes are in part due to the “current high-rate environment,” which seems surprising at surface level, given that high interest rates tend to be a bearish factor for many companies.

“After a tumultuous period of monetary policy tightening, evidence of slowing inflation is gaining traction across many economies. Central banks are expected to start lowering interest rates in 2024, however we expect interest rates to remain at higher levels than over the decade or so following the Global Financial Crisis,” BNY Mellon noted in the report.

BNY Mellon’s Stock Market Predictions

BNY Mellon believes that U.S. equities will average annual returns of 7.4% across the next 10 years, a nearly full percentage point higher than its 6.5% previous forecast. Meanwhile, aggregate bonds are expected to yield 4.8% annualized returns, up from 4.1%.

Next, BNY sees the private equity side enjoying an 8.8% return, up from 8.2% previously, making it the new highest-yielding asset class. That usurps emerging markets equity, which currently sits at a 7.3% return forecast, down from its previous 9.3% projected yield. Hedge funds are projected to enjoy stronger returns, however, up to 5.5% from 4.9% previously.

BNY also offered its predictions for various historical financial benchmarks. This includes a standard 60-40 U.S. stock/bond portfolio, which the bank now expects to enjoy a 6.4% annual return through 2034, up from its previous 5.5% forecast. BNY also forecasts an average Federal Reserve policy rate of 2.9% over the next decade.

Per MarketWatch, BNY Mellon is the successor to the original Bank of New York, which was founded in 1784 by Alexander Hamilton. That makes it the modern version of the country’s oldest bank.

On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

With degrees in economics and journalism, Shrey Dua leverages his ample experience in media and reporting to contribute well-informed articles covering everything from financial regulation and the electric vehicle industry to the housing market and monetary policy. Shrey’s articles have featured in the likes of Morning Brew, Real Clear Markets, the Downline Podcast, and more.

Article printed from InvestorPlace Media, https://investorplace.com/2023/11/stock-market-predictions-what-type-of-returns-can-investors-expect-over-the-next-10-years/.

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