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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 Aberdeen Standard Investments. These forecasts are updated semi-annually with those published on the website updated first. These forecasts are correct as of June 2020.

DUE TO EXTREME MARKET VOLATILITY SURROUNDING THE COVID-19 PANDEMIC WE HAVE RELEASED INTERIM BASELINE FORECASTS AND WILL RESUME PUBLISHING PROBABILITY WEIGHTED FORECASTS IN THE NEXT SEMI-ANNUAL UPDATE.

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

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

Equities

Equity earnings are expected to grow rapidly as we eventually exit the Covid-19 recession, but we forecast a modest long-term reduction in our expectations for equity earnings growth. However, in our base case, this is more than offset by the impact of a long period of much lower bond yields which boosts equity valuations. The result is attractive equity returns, particularly when compared to bonds. While the US (with its heavy technology and healthcare exposure) led the initial recovery, we expect regions with more cyclical exposures to benefit most in the next phase.

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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.

Forecaster Change

Important information For professional investors only, in Switzerland for Qualified Investors – not for use by retail investors

The projections or other information generated by Aberdeen Standard Investments' Forecaster tool, and any forecasting information contained in this document, regarding the likelihood of various investment risk and return outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results.

No projection or forecast can offer a precise estimate of future returns or volatility in global asset classes or markets. Forecasts are inherently uncertain, subject to change at any time based on a variety of factors and can be inaccurate. Aberdeen Standard Investments believes that the benefit of this information is highest in evaluating the potential risk adjusted return of various components of a globally diversified portfolio.

Aberdeen Standard Investments’ forecast modelling incorporates both proprietary and third party tools to derive a risk and return data for each asset class listed. Our forecasts and projections are informed by history while making forward looking assumptions. We make use of economic forecasts, implied market views and assumptions about historical trends and mean reversion over several time horizons. We use various macroeconomic and asset-class specific variables as inputs. In attempting to forecast expected returns and volatility, we apply a Monte Carlo simulation method to project the estimated volatility. This enables us to create 10,000 scenarios for each asset class listed, from which we derive realistic probability distributions for returns, and from which asset class volatility can be derived. Results produced by the forecasting tool will change with each use and over time. Further information regarding our forecast modelling can be delivered upon request.

The data included is strictly for information purposes only and should not be considered as an offer, investment recommendation, or solicitation, to deal in any of the investments or funds mentioned herein and does not constitute investment research. You cannot invest directly in an index.

Any research or analysis used in the preparation of this data has been procured by Aberdeen Standard Investments for its own use and may have been acted on for its own purpose. The information is based on reasonable assumptions supported by objective third party data. The results thus obtained are made available only coincidentally and the information is not guaranteed as to its accuracy. Some of the information in this data may contain projections or other forward looking statements regarding future events or future financial performance of countries, markets or companies. These statements are only predictions and actual events or results may differ materially. The reader must make their own assessment of the relevance, accuracy and adequacy of the information contained in this data and make such independent investigations, as they may consider necessary or appropriate for the purpose of such assessment. Any opinion or estimate contained in this data is made on a general basis and is not to be relied on by the reader as advice. Neither Aberdeen Standard Investments nor any of its employees, associated group companies or agents have given any consideration to nor have they or any of them made any investigation of the investment objectives, financial situation or particular need of the reader, any specific person or group of persons.

Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of the reader, any person or group of persons acting on any information, opinion or estimate contained in this data. Aberdeen Standard Investments reserves the right to make changes and corrections to any information in this document at any time, without notice.

Aberdeen Standard Investments does not warrant the accuracy, adequacy or completeness of the information and materials contained in this document and expressly disclaims liability for errors or omissions in such information and materials.

The MSCI information may only be used for your internal use, may not be reproduced or re-disseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis, should not be taken as an indication or guarantee of any future performance analysis forecast or prediction. The MSCI information is provided on an ‘as is’ basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the ‘MSCI’ Parties) expressly disclaims all warranties (including without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages (www.msci.com).

FTSE International Limited (‘FTSE’) © FTSE 2019. ‘FTSE®’ is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. RAFI® is a registered trademark of Research Affiliates, LLC. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

All data is calculated gross of fees. Assets refer to the following indices or strategies data. UK Equities = MSCI United Kingdom Index; US Equities = MSCI USA Index; Europe ex UK Equities = MSCI Europe Excluding United Kingdom Index; Japan Equities = MSCI Japan Index; Pacific ex Japan Equities = MSCI Pacific Excluding Japan Index; Emerging Markets Equities = MSCI Emerging Markets Index; Global Equities = MSCI AC World Index; UK Gilts = ICE BofAML UK Gilt Index; UK Inflation-Linked Gilts = ICE BofAML UK Inflation-Linked Gilt Index; US Treasuries = ICE BofAML US Treasury Index; US Inflation-Linked Treasuries = ICE BofAML US Inflation-Linked Treasury Index; Euro Govt Bonds = ICE BofAML Euro Government Index; Euro Inflation-Linked Govt Bonds = ICE BofAML Euro Inflation-Linked Government Index; Japanese Govt Bonds = ICE BofAML Japan Government Index; Global DM Govt Bonds = ICE BofAML Developed Markets Sovereign Bond Index; UK IG Bonds = ICE BofAML Sterling Corporate Index; US IG Bonds = ICE BofAML US Corporate Index; Euro IG Bonds = ICE BofAML Euro Corporate Index; Global IG Bonds = Bloomberg Barclays Global Agg Corporate Index; US High Yield Bonds = ICE BofAML US High Yield Index; Europe High Yield Bonds = ICE BofAML Euro High Yield Index; EM Corporate Bonds (Hard) = J.P. Morgan Corporate EMBI Broad Diversified Composite Index; EM Sovereign Debt (Hard) = J.P. Morgan EMBI Global Diversified Composite Index; EM Sovereign Debt (Local) = J.P. Morgan GBI-EM Global Diversified Composite Index; Senior Secured Loans = S&P/LSTA Leveraged Loan Index; ABS - Mezzanine = Bloomberg Barclays Euro ABS FRN BBB Index; Insurance Linked Securities = Swiss Re Global Cat Bond Performance Index; UK Commercial Property = MSCI UK Monthly Property Index; US Commercial Property = MSCI US Property Index; Europe ex UK Commercial Property = MSCI Europe excluding UK Property Index; Global Commercial Property = MSCI Global Property Index; UK REIT = FTSE EPRA/NAREIT UK Index; US REIT = FTSE EPRA/NAREIT United States Index; Europe ex UK REIT = FTSE EPRA/NAREIT Developed Europe ex UK Index; Infrastructure Social = UK listed social infrastructure (comprised of existing UK closed-ended funds); Infrastructure Renewables = UK listed renewable infrastructure (comprised of existing UK closed-ended funds); UK Cash 3M LIBOR = ICE BofAML British Pound 3-Month Deposit Offered Rate Constant Maturity Index; USD Cash 3M LIBOR = ICE BofAML US Dollar 3-Month Deposit Offered Rate Constant Maturity Index; EUR Cash 3M LIBOR = ICE BofAML Euro Currency 3-Month Deposit Offered Rate Constant Maturity Index.

Bloomberg data are for illustrative purposes only. No assumptions regarding future performance should be made.


This content is available in the following countries/regions and issued by the respective entities detailed below:


Europe, Middle East and Africa

United Kingdom (UK): Aberdeen Asset Managers Limited, registered in Scotland (SC108419) at 10 Queen’s Terrace, Aberdeen, AB10 1XL. Standard Life Investments Limited registered in Scotland (SC123321) at 1 George Street, Edinburgh EH2 2LL. Both companies are authorised and regulated in the UK by the Financial Conduct Authority. Austria, Belgium, Cyprus, Denmark, Finland, France, Germany, Gibraltar, Greece, Iceland, Ireland, Italy, Luxembourg, Malta, Netherlands, Norway, Portugal, Spain, and Sweden: Aberdeen Asset Managers Limited, registered in Scotland (SC108419) at 10 Queen’s Terrace, Aberdeen, AB10 1XL. Standard Life Investments Limited. Registered in Scotland (SC123321) at 1 George Street, Edinburgh EH2 2LL. Both companies are authorised and regulated in the UK by the Financial Conduct Authority. Switzerland: Aberdeen Standard Investments (Switzerland) AG (“ASIS”). Registered in Switzerland under company no. CHE-114.943.983. Registered Office: Schweizergasse 14, 8001 Zurich. ASIS holds a distribution licence from FINMA. Abu Dhabi Global Market (“ADGM”): Aberdeen Asset Middle East Limited. Regulated by the ADGM Financial Services Regulatory Authority. Aberdeen Asset Middle East Limited, 6th floor, Al Khatem Tower, Abu Dhabi Global Market Square, Al Maryah Island, PO Box 5100737, Abu Dhabi, United Arab Emirates. South Africa: Aberdeen Asset Managers Limited (“AAML”). Registered in Scotland (SC108419) at 10 Queen’s Terrace, Aberdeen, AB10 1XL. AAML holds a Category I financial services provider (FSP) licence in terms of the Financial Advisory and Intermediary Services Act, 2002, (FAIS) under licence 43675.


Asia-Pacific

Australia and New Zealand: Aberdeen Standard Investments Australia Limited ABN 59 002 123 364, AFSL No. 240263. In New Zealand to wholesale investors only as defined in the Financial Markets Conduct Act 2013 (New Zealand). Hong Kong: Aberdeen Standard Investments (Hong Kong) Limited. This document has not been reviewed by the Securities and Futures Commission. Indonesia: PT Aberdeen Standard Investments Indonesia. PT Aberdeen Standard Investments Indonesia is an investment manager license holder, registered and supervised by the Indonesia Financial Services Authority (OJK). Japan: Aberdeen Standard Investments (Japan) Limited. Malaysia: Aberdeen Standard Investments (Malaysia) Sdn Bhd, Company Number: 690313-D. The People’s Republic of China (“PRC”): Aberdeen Standard Asset Management (Shanghai) Co., Ltd in the PRC only. Taiwan: Aberdeen Standard Investments Taiwan Limited, which is operated independently, 8F, No.101, Songren Rd., Taipei City, Taiwan Tel: +886 2 87224500. Thailand: Aberdeen Standard Asset Management (Thailand) Limited. Singapore: Aberdeen Standard Investments (Asia) Limited, Registration Number 199105448E.


Americas

Brazil: Aberdeen Standard Investments is the marketing name in Brazil for Aberdeen do Brasil Gestão de Recursos Ltda. Aberdeen do Brasil Gestão de Recursos Ltda. is an entity duly registered with the Comissão de Valores Mobiliários (CVM) as an investment manager. Canada: Aberdeen Standard Investments (Canada) Limited, (“Aberdeen Standard Investments”), is registered as a Portfolio Manager and Exempt Market Dealer in all provinces and territories of Canada as well as an Investment Fund Manager in the provinces of Ontario, Quebec, and Newfoundland and Labrador. United States: Aberdeen Standard Investments is the marketing name for the following affiliated, registered investment advisers: Aberdeen Standard Investments Inc., Aberdeen Asset Managers Ltd., Aberdeen Standard Investments Australia Ltd., Aberdeen Standard Investments (Asia) Ltd., Aberdeen Capital Management LLC, Aberdeen Standard Investments ETFs Advisors LLC and Standard Life Investments (Corporate Funds) Ltd.