Goldman Sachs has named the best investment destination. And it's not the United States
The U.S. stock market has been put in second place by the bank
A bet on emerging market stocks in the coming year could yield a return of 8%, according to Goldman Sachs / Photo: Shutterstock.com
According to a fresh forecast by Goldman Sachs, the best investment destination in the coming year will not be the United States. The Wall Street investment giant named emerging market stocks as the most attractive option.
Details
"Emerging markets (EM) equities have the highest expected return under the base case scenario of 8%, which we estimate to have a 55% probability of realization," Business Insider (BI) quoted Goldman Sachs Wealth Management Chief Investment Officer Sharmeen Mossavar-Rahmani as saying in a review published in January with an annualized forecast. On a five-year horizon, the investment bank economist forecasts an average annual return on EM equities at 6%.
The U.S. equity market, as represented by the S&P 500 index, is second in the return outlook. Goldman Sachs expects the US market to grow by 7% over the next 12 months, with an average annualized return of 6% over the next five years. The third and fourth positions over the five-year stretch are held by UK equities and the MSCI All-Country World global index with a projected average annualized growth of 5%, BI writes.
Volatility problem
Goldman Sachs estimated the probability that the growth of EM shares will exceed expectations at 20%. At the same time, the probability of a loss in this market at the level of 15%, the bank's analysts estimated at 25%. Volatility in the baseline scenario for emerging markets is the highest among all considered areas, said Mossavar-Rahmani.
At the same time, the bank rejected concerns about a "bubble" in the U.S. stock market, despite historically high valuations of companies. The volatility of the world's largest economy is declining, which implies a "more reliable" flow of corporate profits and justifies the high cost of U.S. stocks, according to Goldman Sachs.
What tools Goldman advises
The Wall Street investment giant cited the iShares MSCI Emerging Markets, SPDR S&P 500, Franklin FTSE United Kingdom and iShares MSCI ACWI investment exchange traded fund (ETF) securities as instruments to invest in assets with the best potential.
Among these four 2026 ETFs, iShares MSCI Emerging Markets is the leader so far - its shares have gained 5.9% since the beginning of the year. Franklin FTSE United Kingdom is in second place, up 2.4%. The iShares MSCI ACWI added 1.8% in price, while the SPDR S&P 500 - 1.5%.
This article was AI-translated and verified by a human editor
