If you're wondering where the smart money thinks it should be over the next decade, Northern Trust Asset Management (NTRS) has some thoughts. The firm's newly released Capital Market Assumptions (CMA) 2026 Edition points to private markets as the place to be, with artificial intelligence playing the starring role in what could be a pretty impressive run.
The forecast gets specific: private equity and venture capital should clock in at 10.2% annualized returns over the next ten years, handily beating public markets. Private credit isn't far behind at 8.2% annually, benefiting from what Northern Trust describes as a convergence of shifting interest rates and tech trends that support both AI development and private firms more broadly.
The logic here is straightforward enough. As rates come down, credit yields will compress somewhat, but Northern Trust expects private credit deployment to accelerate alongside a pickup in merger and acquisition activity. Translation: companies need capital to build out AI infrastructure, and private credit is positioned to provide it.
"AI continues to demonstrate potential to transform productivity and labor markets, helping to offset the challenges of an aging workforce," said Anwiti Bahuguna, global co-chief investment officer at Northern Trust Asset Management. "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."
Three Big Trends Shaping the Outlook
Northern Trust identifies three major forces that will shape markets and the global economy over the coming decade. First, there's the innovation-versus-demographics dynamic. AI automation and robotics are transforming how work gets done, which helps counter the economic drag from an aging population. The downside? Job displacement is likely along the way.
Second, geopolitical tensions are pushing countries toward self-reliance, which the report suggests could slow growth and stoke inflation while simultaneously encouraging local innovation and new alliances. High U.S. tariffs are already spurring renewed interest in regional trade agreements and efforts to reduce internal barriers.
Third, the debt problem isn't going anywhere. Rising government debt and budget deficits, combined with increased spending, are weighing on global growth. While AI might provide some relief for the U.S., other nations could struggle as heavy debt loads dampen innovation and constrain policy flexibility.
"We believe prioritizing risk-aware growth in portfolios can capture the upside of increased innovation, while mitigating downside risks from demographic and fiscal pressures," said Christian Roth, global co-chief investment officer at Northern Trust Asset Management.
What About Everything Else?
Beyond private markets, Northern Trust's projections cover the waterfront. In equities, the firm expects U.S. stocks to deliver around 6.8% average annualized returns over the next decade, driven by technology-fueled productivity gains. Japanese equities look slightly better at 7.3%, supported by economic and market catalysts, while Australian stocks top the list at 7.7%, thanks to strong banks and natural resource exposure.
Fixed income investors should see improved performance, with U.S. investment-grade bonds projected at 5% and Treasuries at 4.6%. European, U.K., and Japanese bonds are expected to offer decent income with low volatility, which is about as exciting as bond forecasts get.
Real assets are where the AI theme shows up again. Demand driven by artificial intelligence should boost global infrastructure returns to 6.7%, natural resources to 6.4%, and global real estate to 6.2%.
The CMA is Northern Trust's annual assessment of long-term return expectations, and it informs the firm's investment decisions and strategic asset allocation recommendations. With $1.4 trillion in assets under management as of September 30, 2025, the firm's outlook carries some weight in institutional circles.
