What to expect from long-term expected returns — Fathom edition

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This edition of Fathom the Strategy introduces Fathom’s Long-term Expected Returns (FLEx). FLEx formalises in a coherent fashion two important aspects of expected portfolio returns that are often too quickly overlooked. First, the investment horizon matters a great deal. Second, expected returns should be the result of a unified framework that builds not only on the information contained in historical prices, but also accounts for the underlying risks and factors that are driving assets’ valuations away from equilibrium. Overall, we…