Updated guidance published on Monday by the Financial Planning Standards Council (FPSC) and Institut québécois de planification financière (IQPF) projects low single-digit returns for fixed income assets, and mid-single digit returns for equities.
The guidance sets out return projections for major asset classes including foreign equities, emerging market equities, short-term investments, and Canadian fixed income and equities, to guide planners.
The 2016 edition assumes an inflation rate of 2.1%, and projects returns of 3.0% for short-term investments, 4.0% for fixed-income, and 6.4% for Canadian equities. Foreign developed markets are projected to return 6.8%, and emerging markets are seen producing 7.7% returns.
The guidelines are based on publicly available data sources including the Canada Pension Plan, Quebec Pension Plan, Willis Towers Watson portfolio managers’ survey, and various historical data sources..
“Updates to the projection assumption guidelines ensure that financial planners are equipped with the current information to make financial projections,” says Joan Yudelson, vice president of professional practice at the FPSC, in a statement “allowing them to project their clients’ progress toward meeting their life goals and provide appropriate financial planning advice to address any gaps.”
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