Our Mid-Year Capital Market Assumptions highlight that asset return forecasts have generally improved, supported by higher interest rates and more attractive equity valuations. Our 10-year assumptions favor diversified portfolios with greater exposure to international equities, fixed income, and select private assets, while emphasizing the importance of managing uncertainty through long-term, risk-based allocation frameworks.

Key points include:

• Improved return assumptions: Expected 10-year returns increased for both equities and fixed income due to better valuations and higher yields.
• Asset allocation views: The report favors international equities over U.S. equities, increased allocations to fixed income, and a continued role for private assets, such as buyout equity, direct lending, and real estate. 
• Portfolio construction: A diversified 60/40 portfolio may deliver moderate returns, emphasizing the need to account for economic uncertainty and potential downside risks in long-term planning.