Long-term Outlook

In our latest Long-term Outlook, we draw upon the expertise of our worldwide investment teams and combine our macroeconomic expectations with research into key global trends and financial assets. The outcome is a coherent and time-tested outlook for financial markets. 

 

Macroeconomic Scenarios and Expected Returns 2025-2028

At Aegon Asset Management we are part of a company with over 180 years of history in building insurance and investment businesses. Navigating almost every kind of situation, from periods of economic expansion to deep crises and everything in between. This long history and extensive experience in managing pension and insurance assets have taught Aegon Asset Management to navigate short-term fluctuations while maintaining a long-term perspective. 

 

Key points of our latest Long-term Outlook are our views on growth, inflation and global trends:

Global Growth

We expect US growth to cool down, but not to collapse. We think Europe will exit the stagnation, but a strong pickup in growth is not expected. Our base case is that Chinese growth remains below pre-pandemic levels.

Inflation

Inflation is trending towards target levels, allowing central banks to ease restrictive policies and refocus on growth.

Technological Advancements

Innovations in AI, battery technology, energy generation, and biotechnology are expected to drive productivity and enhance well-being. 

Find out more about our macroeconomic expectations
Spotlight: Diversification in Equity Markets

The rise of megacap companies has significantly impacted the diversification of equity benchmarks. While many global indices still offer diversification, regional and country-specific indices are increasingly concentrated, which likely exposes investors to higher idiosyncratic risks. 

Investors must be aware of the potential benefits and risks associated with increased concentration in their portfolios. By understanding these dynamics, investors can make more informed decisions and continue to strive for a balanced and resilient investment strategy. 

Spotlight: Europe’s Slow Productivity Growth and Its Consequences

While the US has seen steady productivity gains, Europe and other regions have lagged, especially since 2000. The US’s continued outperformance can be attributed to different crisis responses: significant job losses and labor reallocation in the US versus employment retention schemes in Europe. Another key factor is the slower technology adoption outside the US. 

Technological advances, particularly in AI, offer hope for future productivity improvements. However, past tech advancements haven’t always led to higher economic growth. Persistent slow productivity growth could threaten fiscal sustainability and lead to societal discontent if living standards don’t rise as expected. 

Spotlight: Our outlook on European Asset-Backed Securities

Central banks are expected to continue their rate-cutting cycle, leading to steadily decreasing short-term rates. However, uncertainty around the terminal rate and persistent inflation will likely cause volatility in longer-term rates. Given the floating rate nature of ABS, this asset class is expected to be less volatile compared to many fixed-rate securities. 

The European ABS market is expected to be well-positioned to navigate the complexities of the current economic landscape, supported by structural features and a favorable interest rate environment. 

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In case you have any questions about the Long-term Outlook, please don't hesitate to contact us.

Jacob Vijverberg, CFA
Head of Asset Allocation
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Jordy Hermanns, CFA
Portfolio Manager
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