Asset Allocation

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Expected Returns (as of 06/30/2015)

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Welcome to the Research Affiliates Asset Allocation site where, using a structural building-block approach, we provide long-term capital market forecasts across a variety of asset classes. The navigation tabs can be used to explore core assets (Overview, Risk, Portfolios tabs) or to do a deeper dive into specific asset classes.

Performance

It’s not enough to look at past performance when thinking about future investment. In many cases, the best-performing asset classes of the past are not expected to continue to be the best in the future. All returns are presented in real terms (net of inflation), in order to show change in investors’ actual capacity to consume.​

10-Year Relative Rank columns identify the assets with the highest (longest green bar) and lowest (longest red bar) return as compared to all other assets.

The Research Affiliates Approach to Capital Markets Forecasting

With the objective of providing transparency to our long-term expected returns, the documents at right detail the methodologies underlying our models. A good place to start is with the methodology overview document, which provides background on the building block approach. This is the common framework that serves as the foundation on which each model is built. Each asset class then has its own methodology document detailing specifics related to that asset class. These are living documents that will evolve over time, and we encourage you to check back in the future for updates.

Deepen Your Understanding

Are Stocks Overvalued? A Survey of Equity Valuation ModelsWe revisit the most commonly used equity valuation tools, comparing their respective strengths and weaknesses, and explain our approach to valuation. No matter the measurement, U.S. equity prices are high and long-term expected returns are low.​
The Whole Story: Factors + Asset ClassesSome of the investment industry’s best thinkers discussed their work at a Research Affiliates meeting. Jason Hsu’s report emphasizes that factor-based investing is incomplete unless it’s paired with an asset-based approach.
The Danger in "Debalancing"Maintaining a well-balanced portfolio when one or more of its strategies is underperforming may be—just like getting a preschooler to eat a well-balanced diet—viewed as a most unpalatable option!