Bar chart compares three investment returns by various asset types: Cyclical hypothetical return (3-5 years), strategic hypothetical return (10 – 15 years), and historical average return (1990 – current). Table provides returns.
| Strategic hypothetical return (10 – 15 years) | Historical average return (1990 – current) | |
|---|---|---|
| Cash alternatives | 1.5% | 2.3% |
| U.S. taxable investment grade fixed income | 3.1% | 5.8% |
| Developed mkt. ex-U.S. fixed income | 2.0% | 5.2% |
| U.S. large cap equities | 7.1% | 10.5% |
| Developed mkt. ex-U.S. equities | 6.4% | 5.2% |
| Emerging mkt. equities | 7.9% | 8.4% |
| Commodities | 6.2% | 2.9% |
Sources: Bloomberg, and Wells Fargo Investment Institute. Historical average returns are for data from January 1, 1991 to September 30, 2021. Strategic return assumptions are as of July 19, 2021. Strategic hypothetical returns are forward-looking geometric return estimates from Wells Fargo Investment Institute of how asset classes and combinations of classes may respond during various market environments. Hypothetical returns do not represent the returns that an investor should expect in any particular year. They are not designed to predict actual performance and may differ greatly from actual performance. There are no assurances that any estimates given will be achieved. An index is unmanaged and not available for direct investment. Past performance is no guarantee of future results. Indexes in order represented by Bloomberg U.S. Treasury Bill (1–3 Month) Index, Bloomberg U.S. Aggregate Bond Index, JP Morgan GBI Global Ex U.S. Index, S&P 500 Index, MSCI EAFE Index, MSCI Emerging Markets Index, Bloomberg Commodity Index. See “Index Definitions and Asset Class Risk Disclosures” link above for index definitions and risks.
Key Takeaways
- Investors may need to consider saving more or spending less in this environment to reach their financial goals.