O
ur Global Relative Return Index (RRI) remains steady at 52.7 for 2025, indicating a continued trajectory towards increased investment opportunities after the initial recovery phase this year. Despite higher 10-year bond yield forecasts, expected returns have also risen, balancing each other out.

    Key takeaways:

    By 2026, we anticipate a decrease in compelling excess return opportunities, but an expansion of neutral return markets. This reflects the challenges of this cycle, where limited capital growth is driven by yield compression due to higher terminal rates compared to pre-pandemic levels.

    The industrial sector remains the most attractive, with Switzerland, the Netherlands, Sweden, Germany, and Portugal offering the widest spread between required and expected returns next year.

    Our outlook comes with risks. Businesses have become less optimistic about near-term global economic prospects, but still consider a recession unlikely in 2025. Our baseline assumes sustained interest rate cuts, but potential disruptors include geopolitics, such as trade tensions, Russia-NATO relations, and Middle East escalation.