Long-term market expectations 28 October 2026

National Bank Investments expects long-term returns to improve from the previous update but remain below the unusually strong returns of the past decade.

• The reference balanced portfolio, comprising 18% S&P/TSX, 24% S&P 500, 12% MSCI EAFE, 6% MSCI Emerging Markets and 40% Canada Bond Universe, has a projected annual return of 5.4% over 10 years, versus 4.8% in the spring forecast and 8.5% realized over the past decade.
• The Canadian fixed-income forecast increased from 3.7% to 4.2%, mainly because higher bond yields have improved yields to maturity.
• The equity benchmark forecast rose from 5.5% to 6.3%, supported by better earnings-growth prospects and more attractive valuations; the benchmark combines 30% S&P/TSX, 40% S&P 500, 20% MSCI EAFE and 10% MSCI Emerging Markets.
• Expected 10-year returns are 6.8% for the S&P 500, 5.3% for U.S. Treasuries and 7.2% for U.S. high yield, implying a 1.5 percentage-point U.S. equity risk premium and a 1.4-point high-yield spread over Treasuries.
• The portfolio analysis uses 25,000 simulations and shows that a 60/40 portfolio has a 75% probability of exceeding a 4% annualized return and a 43% probability of exceeding 6% over 10 years.

Takeaway: The modelling supports a constructive but more modest long-term outlook, with improved bond yields and equity valuations lifting expected returns while portfolio diversification and the stock-bond mix remain central to managing uncertainty.