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Goldman Sachs projects a modest average annual return of 3% for the S&P 500 over the next decade, significantly lower than its historical average of 11% and the 13% return seen over the past decade. This forecast has decreased from an earlier expectation of 8% and is attributed to the high concentration of top tech companies in the index, which is currently at 36%, the highest since 2000.
Furthermore, Goldman indicates a 72% probability that the S&P 500 will underperform Treasury bonds and a 33% chance it won’t keep pace with inflation. The investment bank believes that an equal-weighted S&P index may outperform the traditional market-cap weighted version, which has historically benefited from the success of leading companies.
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