Northern Trust Asset Management Forecasts AI-Driven Strength in Private Markets; United States, Japan and Australia to Lead Equity Returns over Next Decade
MWN-AI** Summary
Northern Trust Asset Management's latest Capital Market Assumptions (CMA) forecast indicates a positive outlook for private markets driven by artificial intelligence (AI) advancements, alongside projected strong equity returns from the United States, Japan, and Australia over the next decade. The CMA 2026 Edition emphasizes the significance of three long-term trends shaping the global economy: rising innovation coupled with declining demographics, a global shift towards self-reliance, and escalating national debts.
The report highlights that AI's transformative potential can enhance productivity, which is crucial as workforces age. Innovation in private markets, particularly through private equity and credit, is expected to thrive as AI facilitates new opportunities in infrastructure. Northern Trust’s forecasts predict that U.S. equities will yield an average annual return of 6.8%, Japan at 7.3%, and Australia leading at 7.7%, driven largely by their respective economic and technological environments. Meanwhile, the fixed-income sector is anticipated to perform better than in previous years, with predictions of 5.0% returns for U.S. investment-grade bonds.
For real assets, the demand fuelled by AI is projected to produce attractive returns, with global infrastructure at 6.7% and natural resources at 6.4%. Private markets are highlighted as particularly advantageous, predicting a 10.2% return for private equity and venture capital combined.
Overall, Northern Trust urges investors to adopt a risk-aware growth strategy in their portfolios, balancing the promise of innovation against challenges posed by demographic shifts and debt pressures. The comprehensive report offers critical insights for long-term investment decisions, advocating for adaptability in navigating evolving market dynamics.
MWN-AI** Analysis
**Market Analysis and Investment Guidance: Northern Trust Asset Management Forecast**
Northern Trust Asset Management's latest Capital Market Assumptions (CMA) forecast offers valuable insights for investors navigating the evolving financial landscape over the next decade. With projections indicating strong average annualized returns from equities in the U.S. (6.8%), Japan (7.3%), and Australia (7.7%), investors should consider reallocating their portfolios to capitalize on these top-performing markets.
The CMA identifies key themes influencing returns, notably the rise of AI and its capacity to enhance productivity despite a declining workforce demographics, alongside rising government debt. AI is poised to act as a catalyst for private market investments—particularly in private equity and credit, which are expected to yield returns of 10.2% and 8.2%, respectively. Investors should thus explore exposure to private markets, as the opportunities created by technological advancements may offer significant upside.
Furthermore, the report highlights fixed income as a stable investment avenue, particularly U.S. investment-grade bonds with a 5.0% return expectation. Given rising global debt levels, this segment may serve as a hedge against financial volatility while ensuring dependable income, making it an attractive option for risk-averse investors.
Investors should also be cognizant of geopolitical trends and the global shift towards self-reliance, which could impact inflation and growth. This environment may create opportunities for innovative local ventures, suggesting a diversified approach that includes real assets such as infrastructure and natural resources—projected to generate returns of 6.7% and 6.4%, respectively.
In conclusion, while traditional equities remain vital to growth, the integration of private market investments, real assets, and stable fixed income can help build resilient, risk-aware portfolios. It is essential for investors to stay vigilant in understanding the interplay of innovation, demographics, and fiscal pressures to optimize long-term financial outcomes.
**MWN-AI Summary and Analysis is based on asking OpenAI to summarize and analyze this news release.
AI innovation, the global shift to self-reliance and rising government debt likely to be key drivers of financial markets
Northern Trust Asset Management published its Capital Market Assumptions (CMA) 2026 Edition , forecasting improving and stable fixed income returns; market-leading U.S., Japanese and Australian equities; resilient real assets; and strong private market prospects fueled by innovation over the next decade.
The CMA also identifies three key long-term trends to markets and the global economy — Rising Innovation and Declining Demographics, the Global Shift to Self-Reliance, and Looming Debt and Deficits — that provide the foundation for returns of stocks, bonds, real assets and alternatives.
“AI continues to demonstrate potential to transform productivity and labor markets, helping to offset the challenges of an aging workforce. Private markets should also benefit from this trend, as AI will likely drive private equity deals and private credit fuels the buildout of AI infrastructure,” said Northern Trust Asset Management Global Co-Chief Investment Officer Anwiti Bahuguna, Ph.D . “Understanding how AI-related gains intersect with rising debt and fiscal pressures will be essential to building resilient portfolios and capturing long-term opportunities.”
“Global markets over the next 10 years will be defined by rapid innovation, shifting demographics and evolving trade dynamics,” said Northern Trust Asset Management Global Co-Chief Investment Officer Christian Roth, CFA. “We believe prioritizing risk-aware growth in portfolios can capture the upside of increased innovation, while mitigating downside risks from demographic and fiscal pressures.”
Northern Trust Asset Management forecasts the following average annualized return expectations across asset classes over the next 10 years:
- Equities: The United States (6.8%), Japan (7.3%) and Australia (7.7%) are projected to lead global returns. U.S. companies are likely to gain from technology-driven productivity, Japanese equities from economic and market catalysts, and Australian stocks from banking strength and natural resources.
- Fixed Income: Long-term investors can expect better fixed-income performance, with 5.0% for U.S. investment grade bonds and 4.6% for Treasurys. Investors in European, U.K. and Japanese bonds can expect decent income with low volatility.
- Real Assets: AI will drive demand for real assets, with expectations for attractive returns in global infrastructure (6.7%), natural resources (6.4%) and global real estate (6.2%).
- Alternatives: Private markets are expected to outperform public markets, with a projected 10.2% annualized return for private equity and venture capital combined. Private credit is expected to return 8.2% annualized.
Driving the CMA’s forecasts are three long-term trends affecting markets and the global economy:
- Rising Innovation, Declining Demographics: AI, automation and robotics are transforming labor markets, offsetting aging populations but causing job displacement. Retraining workers and monitoring productivity measures will be vital, as increasing AI adoption will creating both risks and opportunities across sectors.
- The Global Shift to Self-Reliance: Geopolitical tensions and protectionism are pushing countries toward self-reliance. This shift may slow growth and boost inflation, but also foster local innovation and new alliances. High U.S. tariffs are leading to renewed interest in regional trade agreements and efforts to reduce internal barriers.
- Debt and Deficits Loom Large: Rising debt and government budget deficits, intensified by aging populations and increased public spending, threaten global growth. While AI may aid the U.S., some nations could struggle as high debt dampens innovation and limits policy options.
Rooted in deep capital market analysis, the CMA is an annual report of long-term average annualized return expectations that informs Northern Trust’s investment decisions and strategic asset allocation recommendations. The full report, including detailed 10-year asset class forecasts, is available at: https://pages.e.northerntrust.com/am-cma-10-year-outlook.html
About Northern Trust Asset Management
Northern Trust Asset Management is a global investment manager that helps investors navigate changing market environments in efforts to realize their long-term objectives. Entrusted with $1.4 trillion in assets under management as of September 30, 2025, we understand that investing ultimately serves a greater purpose and believe investors should be compensated for the risks they take — in all market environments and any investment strategy. That’s why we combine robust capital markets research, expert portfolio construction and comprehensive risk management in an effort to craft innovative and efficient solutions that seek to deliver targeted investment outcomes. As engaged contributors to our communities, we consider it a great privilege to serve our investors and our communities with integrity, respect and transparency.
Northern Trust Asset Management is composed of Northern Trust Investments, Inc., Northern Trust Global Investments Limited, Northern Trust Fund Managers (Ireland) Limited, Northern Trust Global Investments Japan, K.K., NT Global Advisors, Inc., 50 South Capital Advisors, LLC, Northern Trust Asset Management Australia Pty Ltd, and investment personnel of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company.
About Northern Trust
Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking services to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has a global presence with offices in 24 U.S. states and Washington, D.C., and across 22 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of September 30, 2025, Northern Trust had assets under custody/administration of US$18.2 trillion, and assets under management of US$1.8 trillion. For more than 135 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit us on northerntrust.com . Follow us on Instagram @northerntrustcompany or Northern Trust on LinkedIn .
Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Global legal and regulatory information can be found at https://www.northerntrust.com/terms-and-conditions .
The publisher’s sale of this reprint does not constitute or imply any endorsement or sponsorship of any product, service or organization.
Unless otherwise noted, the statements expressed herein are solely opinions of Northern Trust. Northern Trust does not make any representation, assurance, or other promise as to the accuracy, impact, or potential occurrence of any events or outcomes expressed in such opinions.
View source version on businesswire.com: https://www.businesswire.com/news/home/20260114204324/en/
Europe, Middle East, Africa & Asia-Pacific Contacts:
Camilla Greene
+44 (0) 207 982 2176
Camilla.Greene@ntrs.com
Simon Ansell
+44 (0) 207 982 1016
Simon.Ansell@ntrs.com
US & Canada Contact:
Joanne Zalatoris
+1 (312) 900-3462
Joanne.Zalatoris@ntrs.com
FAQ**
How does Northern Trust Corporation NTRS plan to leverage AI innovation to mitigate the impact of declining demographics on investment returns in the upcoming decade?
What strategies is Northern Trust Corporation NTRS implementing to address the rising debt and deficits that threaten global growth while maintaining strong performance across asset classes?
In light of the global shift to self-reliance, how will Northern Trust Corporation NTRS adapt its investment strategies to incorporate the potential for local innovation and new trade alliances?
With the forecast for improved fixed income performance, what specific asset classes will Northern Trust Corporation NTRS prioritize to capitalize on these trends over the next ten years?
**MWN-AI FAQ is based on asking OpenAI questions about Northern Trust Corporation (NASDAQ: NTRS).
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