After a volatile yet resilient year for markets, we look to 2026 with cautious optimism that the worst of the global trade and policy uncertainty has passed, leaving a more supportive, if still dynamic, backdrop for economic growth and risk assets.

As volatility, yield curves and earnings growth stabilize, our 2026 Capital Market Assumptions (CMA) point to a lower-return environment than in 2025. This raises the bar for delivering competitive outcomes and underscores the value of newer alternative strategies that can diversify portfolios and seek higher returns by harvesting illiquidity and complexity premia.

Similar to previous years, our assumptions provide insurance investors with forward-looking return and risk estimates for major asset classes across multiple geographies, agnostic of any tactical views or alpha-generating potential.

Overall Observations

  • Fixed income—Expected returns decreased year-over-year, driven by recent rate cuts, lower long-term rate projections and tight spreads across most public and private asset classes
  • Equity—Expected returns generally decreased, driven by slightly lower nominal growth expectations and sustained high price-to-earnings ratios, which lead to anticipated multiple contraction
  • Private Markets and Alternatives—Expected returns broadly decreased in line with their respective public market equivalents, though private assets remain relatively attractive given the wider range of investment opportunities and greater upside potential


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