Adaquant asset class return estimates as of 3rd quarter 2018 are available now.
ETF model portfolios have been updated to reflect the new return estimates. You can purchase the model portfolios in ETF Model Portfolios page.
If you want to create your own asset allocation plans, you will get these latest estimates when you buy the license for Adaquant Asset Allocation Suite.
How does the investing environment look at the moment?
In US, Federal Reserve has been steadily increasing the federal funds rate since end of 2015. These increases have caused all types of interest rates to increase (especially short-term), which means investing in fixed-income has become more and more attractive. For risky assets such as equities, the expected returns are positively affected by increased inflation expectations, but on the other hand high valuation levels of these asset classes drag the expected returns down. The expected returns from investment portfolios have been increasing steadily in the past quarters thanks to higher interest rates, but the expected returns are still quit far below the level of historic returns.
Federal Reserve has indicated to continue increasing federal funds rate until the end of 2019 at least. This will make at least the short-term fixed-income investments even more attractive. On the other hand, if also long-term interest rates increase, the value of existing long-term bonds in the portfolios may be negatively affected. Higher interest rates may also cause problems for the risky assets such as equities.
In UK the central bank has also started to increase the interest rate, however from a very low level. This has already made the short-term fixed-income investments a bit more attractive. However the expected returns from investment portfolios is quite low compared to historic standards.
In Europe and Switzerland the interest rates are not rising in any meaningful way. The central banks have indicated to stay put at least until 2019. The expected returns from investment portfolios stay very weak compared to historic standards.