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I'm frequently puzzled by these 10-year projections. This one is no exception.
The chart shows the prediction that foreign equities will outdistance US equity real returns by a large margin. I suppose the expectation is that the foreign markets will overcome their many current difficulties. I suspect the projection reflects a regression to the mean thinking since over the last two decades US equities have generated about twice the returns over foreign holdings.
Also, I don't understand the U.S. equity return estimate given the decomposed large cap and small cap predictions. In this instance, it seems like the composite sum of the components is greater than either of the components. If true, the perpetual motion machine has been reinvented.
Rob Arnott and his firm, Research Affiliates is the source of that chart showing the expected 10-year returns of different asset classes.
Rob Arnott has managed the Pimco All Asset All Authority fund for 11 years, since inception. So how well has he done implementing his firms' forecasts into a real life portfolio? It appears that he can invest in anything, anywhere with this fund, PAUIX.
Above, PAUIX. Below, the S&P 500 over the same timeframe.
Comments
I'm frequently puzzled by these 10-year projections. This one is no exception.
The chart shows the prediction that foreign equities will outdistance US equity real returns by a large margin. I suppose the expectation is that the foreign markets will overcome their many current difficulties. I suspect the projection reflects a regression to the mean thinking since over the last two decades US equities have generated about twice the returns over foreign holdings.
Also, I don't understand the U.S. equity return estimate given the decomposed large cap and small cap predictions. In this instance, it seems like the composite sum of the components is greater than either of the components. If true, the perpetual motion machine has been reinvented.
I must be misreading the bar chart.
Best Regards.
I agree with MJG and Old_Joe.
O_S
Rob Arnott has managed the Pimco All Asset All Authority fund for 11 years, since inception. So how well has he done implementing his firms' forecasts into a real life portfolio? It appears that he can invest in anything, anywhere with this fund, PAUIX.
Above, PAUIX. Below, the S&P 500 over the same timeframe.