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2026 Capital Market Assumptions: Five-Year Perspective

Discover our latest five-year return forecasts and insights to inform your investment decisions.

March 2026, In the Spotlight

We are pleased to present the eighth annual publication of T. Rowe Price’s Capital Market Assumptions (CMAs).

Over the past year, financial markets have navigated a period of exceptional change, marked by persistent inflation, a reconfigured global trade environment, accelerating artificial intelligence (AI)‑driven capital expenditures, rotation in equity market leadership, and significant geopolitical and fiscal developments worldwide. Markets have largely absorbed higher interest rates, economic activity has stabilized, and the global investment landscape has entered a more balanced—though still uncertain—phase.

As in prior years, our forecasts are grounded in an assessment of current starting valuations. Asset prices today generally reflect more normalized conditions. Equity valuations remain elevated in some regions, particularly U.S. growth equities, while fixed income markets offer slightly lower cash rates and tighter credit spreads than in 2025. Against this backdrop, our 2026 return forecasts are generally stable to modestly lower than last year’s assumptions, reflecting a reduced scope for valuation‑driven equity upside in developed markets outside the U.S. and lower bond yields across most developed markets, with Japan a notable exception.

Within fixed income, lower starting yields provide a smaller source of return. In addition, investor expectations that yields may be higher and credit spreads wider over the next five years contribute to more muted return forecasts—particularly for longer‑duration sectors. Credit‑oriented assets remain comparatively attractive, as higher carry is only expected to be partially offset by the potential impact from spread widening.

Expected returns for alternative investment strategies remain differentiated relative to public markets. These assumptions reflect the continued importance of illiquidity premia, sustained structural demand for private capital, and opportunities for active management, while acknowledging the higher dispersion and idiosyncratic risks inherent in these asset classes.

T. Rowe Price’s CMAs are best understood as forecasts of what we believe to be the central tendencies of forward returns over a five‑year horizon. We do not seek to predict actual or realized returns, as meaningful variation around these estimates is inevitable. Accordingly, our approach to portfolio construction relies on multiple optimization techniques and robustness checks designed to account for uncertainty and model sensitivity.

Our baseline forecasts incorporate the perspectives of senior portfolio managers and analysts across T. Rowe Price’s equity, fixed income, and multi‑asset investment teams. We believe this interdisciplinary process—combining fundamental judgment with quantitative discipline—captures the firm’s collective best thinking.

We welcome your questions, comments, and feedback, as they meaningfully contribute to the ongoing refinement of this publication. Please feel free to contact your T. Rowe Price relationship manager or any of the investment professionals involved in this effort.

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This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise—or even estimate—of future performance.

T. Rowe Price Capital Market Assumptions: The information presented herein is shown for illustrative, informational purposes only. Forecasts are based on subjective estimates about market environments that may never occur. This material does not reflect the actual returns of any portfolio/strategy and is not indicative of future results. The historical returns used as a basis for this analysis are based on information gathered by T. Rowe Price and from third‑party sources and have not been independently verified. The asset classes referenced in our capital market assumptions are represented by broad‑based indices, which have been selected because they are well known and are easily recognizable by investors. Indices have limitations due to materially different characteristics from an actual investment portfolio in terms of security holdings, sector weightings, volatility, and asset allocation. Therefore, returns and volatility of a portfolio may differ from those of the index. Management fees, transaction costs, taxes, and potential expenses are not considered and would reduce returns. Expected returns for each asset class can be conditional on economic scenarios; in the event a particular scenario comes to pass, actual returns could be significantly higher or lower than forecast.

Visit troweprice.com/glossary for definitions of financial terms.

Important Information

This material is being furnished for general informational purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice. Prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a guarantee or a reliable indicator of future results. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources’ accuracy or completeness. There is no guarantee that any forecasts made will come to pass.

The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request. It is not intended for distribution to retail investors in any jurisdiction.

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© 2026 T. Rowe Price. All Rights Reserved. T. Rowe Price, INVEST WITH CONFIDENCE, the Bighorn Sheep design, and related indicators (see troweprice.com/ip) are trademarks of T. Rowe Price Group, Inc. All other trademarks are the property of their respective owners. Use does not imply endorsement, sponsorship, or affiliation of T. Rowe Price with any of the trademark owners.

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