Asset Class Risk-Return Map: 2018 review and outlook

• Investors were amply rewarded for risk-taking in 2017, with recovering growth, supportive liquidity, prospective tax cuts and lower interest rates all supporting higher valuations.
• These fundamentals, combined with a significant decline in market volatility led to a strong year for markets with equity markets at record highs
• Portfolio positioning for asset allocation remains key and we refresh the risk-return characteristics of each asset class for GBP investors.

For historic and expected asset class risk-return perspectives, see below.

Fig. 1: 1-year historic asset class risk-return for GBP investors

Fig. 2: 3-year historic asset class risk-return for GBP investors

Fig. 3: 5-year expected asset class risk-return for GBP investors

Source: Blackrock Investment Institute, total returns basis (arithmetic) for GBP investors

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Chart data is as at 30-Dec-17