Key Updates in This Quarter's Forecasts

Our long-term outlook for fixed income assets shifted significantly higher from last quarter, coincident with the increase in sovereign
interest rates in Q4 2024. Adjustments to our 10-year annualized return forecasts include:

• US Aggregate Bonds: Revised to 5.23% from 4.09% last quarter.
• US Long Treasury Bonds: Revised to 5.84% from 4.26% last quarter.
• Global Aggregate Bonds Hedged: Revised to 4.56% from 3.85% last quarter.
  

Our 10-year forecasts for equity markets outside the US continue to exceed those of large-capitalization US equities, primarily attributable to more favorable valuations:

• US Large-Cap Equities: Forecasted at 5.79%.
• International Equities ex-US: Forecasted at 8.27%.
• Emerging Markets Equities: Forecasted at 8.79%.
  

This quarter's portfolio rebalancing recommendations include:

• Reduction in US Equity allocation.
• Reduction in Commodity allocation.
• Increase in Fixed Income exposure.