5-year outlook – What returns investors can expect by 2029

The 14th edition of the British publication Expected Returns is titled “Atlas Lifted”. This year's edition focuses on the mythological titan Atlas, who carries the world on his shoulders with the help of entrepreneurial innovations in artificial intelligence (AI) and many other profitable investment opportunities. Atlas is not only the world, but also the returns of most major asset classes

Base scenario: “Atlas Lifted” (50 percent probability)

In this scenario, Robeco assumes moderate but steady economic growth, driven by advances in artificial intelligence, with US gross domestic product (GDP) per capita growing by 1.75 percent annually. The expectation is that other advanced economies, particularly in Europe, will catch up with the US and contribute to balanced global growth. And that better investment opportunities will arise as capital allocation becomes more efficient. Inflation is expected to average 2.5 percent, with central banks possibly underestimating the higher neutral interest rate.

Bear scenario: “Atlas Adrift” (30 percent probability)

This scenario assumes continued inflation and stagflation in the US caused by persistently high government deficits and a shift in global power dynamics. Inflation could remain high and threaten macroeconomic stability. This scenario assumes that while the battle against inflation appears to be won initially, macroeconomic stability will be severely threatened, similar to previous periods of high inflation.

Bull scenario: “Atlas Connected” (20 percent probability)

In the most optimistic scenario, the rapid adoption of AI leads to significant productivity gains with trend growth of 2.25 percent and robust economic development with real GDP growth approaching 3 percent and inflation around 2 percent. Greater geopolitical stability and greater capital intensity would contribute to a favorable investment environment in which central banks maintain neutral policy interest rates.

Investment policy implications

• Base scenario: Investment returns in euros are forecast to be below the long-term average, with the exception of emerging market bonds, investment grade securities and commodities. Risk-free rates are expected to rise, reducing the risk premiums of most asset classes. The highest returns are expected for emerging market equities. EM equities in euros are expected to yield 7.25 percent annually, followed by emerging market bonds at 6.0 percent. Equities in developed countries are expected to yield 6.5 percent. In the credit sector, investment grade corporate bonds are expected to yield 5.25 percent per annum over the next five years and high yield bonds 5.5 percent per annum. Real estate is forecast to yield an average annual return of 5.5 percent in the base case, while commodities are expected to yield 4.75 percent.

• Bear scenario: Inflation and instability could have a negative impact on returns, particularly for risky assets, although commodities could benefit and their yield could rise to 8.0 percent.

• Bullish scenario: AI-driven productivity gains could lead to above-average returns in EM bonds and commodities, although other sectors could also perform well.

Peter van der Welle, Strategist Multi-Asset Solutions at Robeco, explains: “Our 5-year outlook reflects this new era in which capital owners are increasingly considering stakeholder well-being in addition to shareholder profits. The free market economy is less efficient and the era of hyper-individualism is behind us. Instead, today's investors focus on a balance between profitability and broader societal impact.”

The full edition of Expected Returns 2025-2029 can be found here (download as PDF).