Twice a year, we update our Long-Term Market Expectations (LTMEs) for major asset classes over a 10-year and 30-year investment horizon. Based on our building-block methodology (10-year) and risk premia methodology (30-year), these projections are the foundation of National Bank Investments’ strategic asset allocation (SAA) and portfolio construction.
For the current edition, this results in an anticipated annual return of 4.8% for a benchmark balanced portfolio¹ over a 10-year investment horizon, which is lower than the realized return of 8.3% over the past 10 years. However, this forecast is slightly higher than the 4.3% we anticipated in the Fall 2025 update, with a more favorable outlook for equities reflecting slightly lower valuations than six months ago. Our model projects an annual return of 3.7% for the Canadian fixed income universe over the next 10 years, about the same as the current yield-tomaturity. On the equity side, while the anticipated annual return of 5.5% for our benchmark index² is well below the historical average, the outlook remains more favorable for Emerging Markets, where expected earnings growth is relatively strong while the PE ratio is in line with its historical average.
Ultimately, beyond the inevitable short-term fluctuations, expectations for a balanced portfolio remain largely positive for long-term investors, albeit lower than the above-average returns achieved in recent years.