The traditional investor portfolio — which is made up of 60% stocks and 40% bonds — will return just 4.1% over the next 10 years, Morgan Stanley predicts.
, bringing its gain on the year to nearly 18%. But Morgan Stanley has a message for investors: Don't expect anything near this return for the next 10 years.according to Morgan Stanley, which ran analysis on what current valuations for asset classes means for future returns historically.
The traditional investor portfolio — which is made up of 60% stocks and 40% bonds — will return just 4.1% over the next 10 years, Andrew Sheets, chief cross-asset strategist at Morgan Stanley, calculated. That would be close to the 60/40 portfolio's lowest rolling 10-year periods of the past 20 years. It also would be rare looking back further with an expected return this low only observed on 4% of rolling 10-year periods going back to 1950.
Why so low? Such a low portfolio return is likely after a decade of massive multiple expansion for stocks and a flood of money into bonds as central banks ease monetary policy to re-spark economic growth. These measures have led to the second-longest bull market for stocks on record. The bull market is now more than 10 years old. Over that time, the S&P 500 has returned more 13.8% annually to investors.
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