Capital Market Assumptions 2026

Each year, the Voya Multi-Asset Strategies and Solutions team develops capital market forecasts for the coming decade. This process focuses on structural trends that shape returns and risks—essential for setting strategic allocations of major asset classes across multi-asset portfolios. 

Drawing on a broad set of macroeconomic and financial data, we analyze how evolving economic drivers—such as labor force growth—could affect potential GDP relative to productivity trends. Historically, immigration-driven labor expansion matched productivity’s contribution to U.S. GDP growth. However, recent policy changes are expected to reduce annual immigration from ~2.5 million to ~500,000. This sharp slowdown in labor force expansion is likely to weigh on potential GDP. 

At the same time, productivity is gaining traction after years of historically weak growth, supported by a surge in capital investment and rapid technology adoption. A shrinking labor pool and demographic challenges are spurring companies to spend more on automation, artificial intelligence, and advanced technologies, reinforced by government initiatives. 

The result has been a shift in the balance of growth drivers, where productivity gains have sustained America’s economic momentum, offsetting slower growth in the labor force. GDP data signal resilient private demand despite fiscal uncertainty. Two Fed rate cuts in 2025 have brought the federal funds target range to its lowest level in three years. Further easing plus the end of quantitative tightening should support liquidity. 

Still, inflation is expected to remain above the Fed’s 2% target and exhibit greater volatility due to structural factors such as tariffs, deglobalization, supply constraints, and rising state intervention. Disinflationary effects from technology and productivity gains may offset some of these pressures, but these benefits will likely unfold over a longer horizon. 

We also examine whether corporate profit margins will revert to historical norms. Our research suggests that investments in AI and automation could continue to reduce marginal costs and enhance productivity, similar to the IT revolution. These innovations, coupled with premium pricing for advanced products, may allow profit margins to remain elevated or even expand, supporting current valuations. 

In equities, elevated valuations and compressed risk premiums point to a decade of below-average U.S. equity returns. Meanwhile, global markets, particularly emerging markets, offer more attractive valuations. 

In fixed Income, bond yields have normalized, with the 10-year Treasury expected to hold in the 3.5-4.0% range amid fiscal pressures and sticky inflation. Starting nominal yields near decade-long highs are providing opportunities. 

These trends point to a market shaped by new growth drivers, shifting valuations, and evolving risks. Disciplined asset allocation and active risk management remain key to uncovering alpha in an era of lower-beta returns and heightened volatility. We hope this report supports your decision-making process and wish you a successful 2026.

Our Capital Market Assumptions (CMA) 2026 report details our research on asset class returns, standard deviations and correlations over the 10-year horizon from 2026 through 2035. These estimates represent key inputs into strategic asset allocation decisions for our multi-asset portfolios and provide context for shorter-term macroeconomic and financial forecasting. 

Our base-case forecasts are informed by modest potential gross domestic product (GDP) growth, reduced labor supply and elevated inflation. To avoid using a single-point-estimate forecast, we also incorporate an alternative scenario reflecting slightly better macro inputs. Our alternative scenario is based on marginally higher productivity and a lower terminal federal funds rate. 

Key takeaways: 

• The next decade will likely be characterized by returns near or below historical averages across major asset classes.
• Developed market equities are likely to deliver mid-single-digit returns, with the U.S. in-line with most other comparable markets.
• Emerging market equities should produce relatively strong returns, but with higher expected volatility than developed markets.
• Fixed income return expectations are broadly in line with long-term historical norms, yet meaningfully higher than the past decade’s averages due to elevated starting yields.

A note about risk: The principal risks are generally those attributable to stock and bond investing. The value of an investment is not guaranteed and will fluctuate. Equity investments are subject to market, issuer and other risks. Market Risk: Securities may decline in value due to factors affecting the securities markets or particular industries. Issuer Risk: The value of a security may decline for reasons specific to the issuer, such as changes in its financial condition. Bonds are also subject to Market and Issuer risk, as well as interest rate, credit, prepayment, extension and other risks. Bonds have fixed principal and return if held to maturity but may fluctuate in the interim. Interest Rate Risk: When interest rates rise, bond prices fall; bonds with longer maturities tend to be more sensitive to changes in interest rates. Foreign securities: Foreign investing poses special risks including currency fluctuation, economic and political risks not found in investments that are solely domestic. These risks are generally intensified in emerging markets. Additional risks include, but are not limited to: Other Investment Companies’ Risks, Price Volatility Risks, Inability to Sell Securities Risks, Securities Lending Risks, Investment Model Risks, Liquidity Risk and Market Capitalization Risk.