5-year Expected Returns: The Great Rewiring

Robeco argues that the shift from efficiency to resilience, driven by geopolitical fragmentation, AI and heavier investment, will support risk assets over 2027-2031 while widening the range of outcomes.

• Trade is being reorganized rather than fully deglobalized, capital is shifting from consumption toward investment, and production is being redesigned around AI, which Robeco expects to augment labor more than replace it.
• In euros, Robeco forecasts five-year annualized returns of 8.0% for emerging-market equities, 7.0% for developed-market equities and listed real estate, 5.5% for local-currency emerging-market debt, and 4.25% for global high-yield credit.
• The base case, the “Great Rewiring,” has a 50% probability and combines stronger investment and productivity with higher inflation; the “Luminous Renaissance” bull case has a 15% probability, while the stagflationary “Synaptic Decay” bear case has a 35% probability.
• In the bull case, developed- and emerging-market equities could return 11.5% and 11.25% annually, versus -1% and -4.25% in the bear case; hard- and local-currency emerging-market debt range from 6.25% and 4.0% to 1.5% and 0.75% respectively.
• Climate-policy reversals in the US may reduce the financing penalty for high-emission companies, while Europe retains stricter policies; climate transition and physical risks are expected to modestly reduce five-year returns, with emerging-market debt most exposed.

Takeaway: Robeco favors equities, real estate and selected emerging-market assets, but recommends portfolios able to adapt to a wider distribution of outcomes because the same rewiring that can deliver a productivity renaissance could also produce an AI-capex collapse, recession and stagflation.