10% Real Returns? Patience May Be Your Friend
Is a 10% real return target still possible? Market dynamics increasingly demand patience, selectivity, and disciplined positioning across asset classes as opportunities have become uneven, narrow, and harder to implement.
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8/19/2026
15 min read
Topic
Multi-Asset
Key takeaways
- Achieving 10% real returns is possible but increasingly dependent on selective positioning rather than broad market exposure.
- Fewer opportunities in equities, fixed income, and private markets call for more careful risk alignment and disciplined allocation.
- Patience, liquidity, and active management can help investors capitalize on more attractive opportunities as market conditions evolve.
Executive summary
Can investors still target a 10% real return?
Achieving a 10% real return has been within reach at low levels of risk for several years, but market conditions suggest a more complicated path ahead. Supportive market dynamics, including strong equity performance, favorable bond yields, and declining inflation, have helped portfolios reach this threshold in prior years. Replicating those outcomes may require greater risk at a time when compensation for that risk appears increasingly constrained.
Why market conditions are challenging high real returns
Across asset classes, the opportunity set has narrowed. In equities, higher valuations, concentrated market leadership, and limited income generation reduce the likelihood that broad index exposure alone can deliver double-digit real returns. Instead, we believe investors may need to adopt a more selective approach, targeting opportunities across geographies, sectors, and factors while carefully aligning risk exposures with portfolio objectives.
Fixed income: Targeting stability without stretching for yield
Fixed income presents a different profile. While yields have improved relative to recent history, expected real returns have remained modest, supported more by income and diversification benefits than by significant upside. Incrementally higher yields may be available in lower-quality or more complex securities, but these often introduce additional risks that may not be sufficiently compensated.
Opportunities amid private market headwinds
Private markets, historically a source of excess returns, have also been facing headwinds since inflation peaked in 2022. Rising borrowing costs, increased competition, and valuation pressures have diminished the tailwinds that previously supported strong performance. Select opportunities may remain—particularly in secondary markets and distressed strategies—but they require careful access and discipline.
Building a patient, risk-aware portfolio approach
Rather than pursuing a 10% real return through aggressive positioning, we see the benefit of maintaining liquidity, focusing on quality, and deploying capital opportunistically as market conditions evolve. This perspective underscores Allspring’s disciplined, risk-aware approach to navigating complex market environments.
Common questions about real returns
- Can investors still achieve a 10% real return today?
Achieving a 10% real return remains possible but is more challenging in the current environment. It may require more precise risk and asset allocation decisions. Broad market exposure alone may not meet this target.
- Why are real return expectations lower today?
Higher valuations, tighter credit spreads, and shifting macro conditions constrain forward-looking returns and reduce the margin for error. As a result, investors may need to be more selective in deploying capital.
- What role can equities play in real return strategies?
Equities have remained a key driver of long-term real returns but may have a narrower path forward. Returns have increasingly been influenced by valuation levels, earnings growth, and concentration risks. Selective exposures may offer more balanced outcomes than broad indexes.
- How can fixed income contribute to real returns?
Primary benefits of fixed income include stability, income, and diversification. While returns may be modest, they can help preserve capital and enhance portfolio resilience. Strategic allocation may improve risk-adjusted outcomes.
- Where does Allspring currently see opportunities?
We are seeing opportunities in certain areas, including underrepresented equity segments, high-quality credit, and select dislocations in private markets. These areas often provide more balanced risk/return trade-offs. However, careful evaluation is essential.
All investing involves risks, including the possible loss of principal. There can be no assurance that any investment strategy will be successful. Investments fluctuate with changes in market and economic conditions and in different environments due to numerous factors, some of which may be unpredictable. Each asset class has its own risk and return characteristics.
This material is provided for informational purposes only and is intended for professional/institutional investor and qualified client use only. Not for retail public use.
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