Introduction

Background

This document is intended to provide up-to-date estimates of the expected returns of asset classes and portfolios for Canadian investors. The methodology underlying these estimates is outlined in a separate document.

What’s an expected return?

An expected return is our best estimate of future investment returns over a 30-to-40-year time horizon. These estimates take into consideration current asset prices and asset class return history. We recognize that these estimates are subject to a substantial margin of error. We view them as a weighted average of all plausible scenarios, rather than a specific prediction.

In general, our expected return estimates are nominal, which means they are built upon an estimate of future Canadian inflation. In addition, our estimates do not take account of the trading costs and management fees.

What’s in our investment portfolios?

We use market-cap weighted benchmarks to estimate expected returns. We form two global equity portfolios to produce asset mix expected returns; one with 20%, 40% and 40% allocated to Canadian, U.S. and international equity, and the second being split equally between all three asset classes.

 

Contributors