Northern Trust Asset Management Forecasts AI-Driven Strength in Private Markets in its Capital Markets Assumptions

CHICAGO - 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.