For Informational Use Only

Background

Each year, the Inspire Investment Committee analyzes and updates its capital market assumptions for various asset classes. The assumptions below are long-term in nature (ten years+) and can be used to model different portfolio allocations, which in turn can be utilized by investors for investment planning purposes. The Inspire Investment Committee reviews historical return, risk, and correlation statistics for different asset classes and then formulates its assumptions based on current market conditions. These assumptions are based on our best estimates with the information available at the time of this writing, and there are no guarantees that these assumptions will be realized.

Key Takeaways 

Return Assumptions:

• Inflation: Slightly higher and sustained level of inflation compared to previous years
• US fixed income: Increased to 4.50% given modestly higher expected long-term level of interest rates
• US equity: 7.25-9% range, with lower large-cap performance and US small-cap equities outperforming their mid- and large-cap counterparts
• Non-US developed & emerging market equity: Lowered to 8.25% for non-US developed and 9.00% for emerging markets, both with a probability of outperforming large-cap US equity

Risk & Correlation Assumptions:

• Risk (standard deviation) and correlation assumptions are in line with historical figures with a modest increase for US Fixed Income, US Large Cap Equity, US Mid Equity, and Small Cap Equity.

Hypothetical Portfolio Results & Inspire Strategic Portfolio Allocations:  

• Portfolio return assumptions are very similar to last year. Although US Fixed Income assumptions modestly increased, this was offset by a general lowering of Non-US Developed and Emerging Markets equity asset class return assumptions. As a result, the 60% Equity/40% Fixed Income portfolio return assumption stayed the same at 6.7% over the next 10 years.

• Inspire strategic allocations reflect long-term assumptions with overweights to US small-cap, US mid-cap, and international large cap equity, and underweights to US large-cap, international small cap, and emerging markets relative to the global equity market (as represented by the MSCI ACWI IMI Index which is one of the most comprehensive global all cap indices available with over 8,250 constituents and covering 99% of the global equity investment opportunity set).

• Below are the Inspire strategic allocations as of March 31, 2026.  These allocations remain unchanged from the previous year. 

Investor Implications

• There are many instances in the Bible that offer wisdom about planning ahead and being prudent with our money (e.g., Proverbs 13:16, Proverbs 15:22, and Luke 14:28-30).  
• At Inspire, we believe that the most prudent approach for a long-term investor is to maintain a proper asset allocation with disciplined rebalancing. This can be achieved with Inspire globally diversified strategies or individually constructed portfolios utilizing our broad array of ETFs.
• If you are working with an investor with a longer time horizon (10+ years), a portfolio with a higher allocation to equities would be appropriate. However, if you work with an investor with a shorter-time horizon (<5 years), a lower risk tolerance, and/or increased cash needs (e.g., greater than 5% annual spending), a more conservative portfolio with a higher allocation to fixed income would be appropriate.
• Currently, investors should expect lower long-term returns, especially compared to recent history. For example, the S&P 500 returned 12.5% over the last ten years even with returns of 25.0% in 2024 and 17.9% in 2025. Although US large cap equities have performed well versus other asset classes, our long-term assumptions and allocations favor US small cap, US mid cap, international, and emerging market equities, where valuations appear more attractive, as shown below. Investors should also plan for increased volatility (both upside and downside), especially in the near-term.

If you have questions on how you can use this information with your clients, feel free to reach out to the Investment Management Team. We stand ready to work with you if you need help to determine where clients may fit on this spectrum and what Inspire disciplined strategy would be most appropriate for their needs, all while investing your values and giving glory to God!

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This is a publication of the Inspire Investment Committee.