Where are the asset class investment opportunities?
The chart illustrates the effect of current valuation on expected return over the next five years. Buying undervalued assets results in positive valuation returns. Buying overvalued assets results in negative valuation returns.
How to read this chart. On the far left side of the chart above are the undervalued asset classes. The green “Valuation Return” is the additional return expected above the blue “Long Term Return” for that asset class – in the next 5 years. It is positive and ADDS to the long-term returns. In the middle and to the right side of the chart are negative green returns of overvalued asset classes. They are expected to reduce or SUBRACT from the blue returns of those asset classes in the next 5 years.