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Cash-equity line

* Unhedged Value

About Forecaster

The Forecaster tool allows investors to select a combination of assets, currencies and time horizons of interest for comparison on a risk-return chart. These forecasts are produced by the Multi-Asset Solutions’ Research team at abrdn. We aim to update the forecasts on a semi-annual basis, with the current numbers correct as of February 2022.

Return projections are estimates and provide no guarantee of future results.

For institutional, professional, qualified/wholesale investors only. Not for retail clients.

Equities

Regional outlook

Regional equities have followed different paths in recent years. US equities, powered by strong technology stocks with high earnings growth, have outperformed other regions by a large margin. Though there has been a little bit of catch up in recent months as cyclical value stocks have outperformed.

Our current view is that the US will continue to offer a growth advantage over other regions. When combined with our central expectation that interest rates will rise only a little and remain historically low, this growth will continue to justify the US’s richer valuation and relatively attractive returns. Japan and Europe are both held back by their relative sluggish structural growth expectations and deeper long-term scarring from Covid recessions. The UK remains interesting from a valuation point of view. Its high exposure to cyclical sectors means that, after many years of underperformance, it may finally have its day in the sun as the recovery gains momentum. EM may also be attractive as the recovery accelerates.


The war in Ukraine started after these forecasts were completed. Of course, it raises new uncertainties for returns – both the possibility of a second supply side shock and for regional and sector growth expectations. Its repercussions will be considered in our next update.


Rates
Credit
Alternatives
Legend

Cash-equity line

* Unhedged Value

NOTE

The cash-equity line serves to illustrate risk-adjusted relative performance. Assets above the line are expected to outperform a portfolio of equivalent risk containing only cash and equities; assets below are expected to underperform.

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