Faced with questions about the impact of artificial intelligence (AI) on global economic productivity, regional demographic shifts, persistent geopolitical fragmentation, and the reshaping of international trade and financial relations, our annual analysis of structural macroeconomic assumptions and their implications for major asset classes is of increased importance to investors.
In this series dedicated to charts that inform our investment decisions, we focus on expected performance over the next 10 years in various asset classes, as well as our currency forecasts for the same period. From a more local perspective, we analyze real estate returns in Switzerland. This selection is taken from our publication “Rethinking Assumptions in Financial Markets.”
Sources of more balanced performance between assets and equity markets in different regions
In our view, global equities will continue to deliver solid performance thanks to their exposure to both corporate growth and profitability. However, the above-average stock market gains generated over the past decade may be difficult to replicate.
Bonds should continue to offer portfolios a stable source of income, particularly corporate bonds, which offer relatively high yields.
Bonds should continue to provide portfolios with a stable source of income, particularly corporate bonds, which offer relatively high yields. In the credit segment, we anticipate resilience: strong cash returns help offset low spreads (i.e., the yield offered by corporate bonds above that of equivalent sovereign bonds). Measured in US dollars, we expect performance of approximately 5.1% for investment-grade bonds and 5.7% for high-yield bonds.
Our assumptions for expected performance over the next ten years, compared to the actual performance of the last ten years, in USD
The dollar is expected to depreciate gradually in the long term.
Following Donald Trump’s announcement of tariffs, the greenback fell against major currencies such as the euro, the Swiss franc and the pound sterling.
The euro and the Swiss franc appreciated at the beginning of 2025, gains they largely maintained until December. The pound sterling, particularly sensitive to local news, experienced brief periods of rebound. However, it lost ground against the euro over the course of the year, as the Bank of England resumed its easing program. In Japan, the most significant event occurred earlier, in March 2024, when the Bank of Japan ended negative interest rates and yield curve control measures (unlimited transactions allowing direct influence on borrowing costs). The authorities intervened when the yen reached historic lows. The yen nevertheless appreciated against the US dollar in 2025, in line with announcements regarding tariffs, before relinquishing its gains and returning to its level at the beginning of the year.
The chart below illustrates our projected evolution over the next ten years in this complex and volatile environment. These estimates are based on prevailing cash rates at the time of calculation, as well as the implied annualized compound return.
Our analysis reveals that the US dollar is somewhat overvalued against major currencies, while the euro and the British pound are slightly undervalued, suggesting potential for gradual appreciation over time.
Our analysis reveals that the US dollar is somewhat overvalued relative to major currencies, while the euro and British pound are slightly undervalued, suggesting potential for gradual appreciation over time. The Swiss franc and Japanese yen also appear undervalued against the greenback, suggesting a possible adjustment over time. Looking at non-US dollar pairs, the euro is expected to appreciate against the British pound but is trending downward against the Swiss franc. Overall, these valuation signals provide a directional framework for strategic positioning over a ten-year horizon.
Exchange rate fluctuations estimated by Lombard Odier for the next 10 years (compound annual performance)
The Swiss exception
Switzerland stands out as an exception in a context of structurally higher interest rates than in the previous decade in developed markets. With interest rates so low, it will be difficult to generate significant returns through Swiss sovereign bonds or even Swiss corporate bonds.
To increase the returns and income of portfolios denominated in Swiss francs, we include an allocation dedicated to Swiss real estate.
To increase the returns and income of portfolios denominated in Swiss francs, we include an allocation dedicated to Swiss real estate (see chart below).
Swiss real estate is benefiting from low interest rates: distribution yield and 10-year federal interest rate.
