Key Updates in This Quarter's Forecasts
PGIM Quantitative Solutions’ 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 its 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.
Its 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.
The views expressed herein are those of PGIM Quantitative Solutions investment professionals at the time the comments were made and may not be reflective of their current opinions and are subject to change without notice. Neither the information contained herein nor any opinion expressed shall be construed to constitute an offer to sell or a solicitation to buy any security.
Certain information in this commentary has been obtained from sources believed to be reliable as of the date presented; however, we cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as of the date of issuance (or such earlier date as referenced herein) and is subject to change without notice. The manager has no obligation to update any or all such information, nor do we make any express or implied warranties or representations as to the completeness or accuracy. Any projections or forecasts presented herein are subject to change without notice. Actual data will vary and may not be reflected here. Projections and forecasts are subject to high levels of uncertainty. Accordingly, any projections or forecasts should be viewed as merely representative of a broad range of possible outcomes. Projections or forecasts are estimated, based on assumptions, subject to significant revision, and may change materially as economic and market conditions change.
This material is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any client or prospective clients. The information is not intended as investment advice and is not a recommendation. Clients seeking information regarding their particular investment needs should contact their financial professional.
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