Page 16 - CCFA Journal - 12th Issue

Markets 市场观察 加中金融

1
Markets outlook
We take a long-term view on investing, and we encourage our clients to do so as well. This is part of the reason we look at
annualized returns over a ten-year period.

Our ten-year annualized, nominal expected return projections, at the end of September 2023 are shown below:

Table 1

Canadian and Global Equities

With sizable reductions in equity values across the Canadian and global markets during the third quarter, due to market
expectations of “higher for longer” interest rates, we maintain a positive long-term outlook for equity returns. Our median 10-year
returns expectations for Canadian equities at the end of September 2023 are in a range of 5.3% to 7.3%, about 0.5% higher than
our mid-year 2023 estimate and 0.7% higher than January 2023 levels. Likewise, for global stocks (ex-Canada, unhedged), our
forecasts have improved by over 60 basis points to a 4.6% - 6.6% range, compared to mid-year 2023 and almost unchanged
compared to the beginning of the year.
Canadian and Global Bonds

Expectations of higher interest rates was the animating sentiment in the quarter, and resulted in an upward, and an almost parallel,
shift in yields across the yield curve by 25 to 80 basis points in Canada and the US. As a result, at the end of September 2023, we
anticipate that median 10-year returns for Canadian bonds will range from 4.3% to 5.3%, over 80 bps basis points higher than our
forecast at the end of June 2023 and around 90 higher than our forecasts at the inception of the year 2023.

Likewise, for global aggregate bonds (ex-Canada, hedged), we now anticipate median 10-year returns of 4% - 5%, about 80 basis
points higher than our beginning and mid-year 2023 estimate.

1 All returns are in Canadian dollars, annualized median expected returns over the next 10 years and at the end of September 2023 using
Vanguard Capital Markets Model.
CCFA JOURNAL OF FINANCE November 2023
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