Asset Return Assumptions - RightCapital Help Center

Tailor Global Asset Returns in RightCapital

Aligning assumptions with your desired outcomes is essential in ensuring tailored advice for each financial plan. The °°° More Menu > Assumptions > Asset Return tab of the Advisor Portal allows you to review and update asset return assumptions that will be used by RightCapital's Monte Carlo and Cash Flow projections. Your selections here will be used as the global asset return assumptions across all of your client plans:

When dialing in your asset return assumptions, each asset class allows you to specify the Interest, Dividend and Capital Gain percentages, which make up the Total Return for that asset class. You can customize the percentages for each field, or choose to use an available preset.

Historical Index Returns

The Historical Index Returns preset is the default selection in RightCapital. These assumptions are geometric returns based on historical data from various market indices. This set of assumptions is curated by RightCapital, and is updated on an annual basis.

For equity asset classes, RightCapital provides assumptions based on return data from the last 50 years. For indices that do not have 50 years of data, RightCapital delivers data back to the earliest date that the index is available.

For fixed-income classes, RightCapital provides assumptions based on the last 20 years (as many of these indices do not have 50 years of data).

The Historical Index Returns for 2024 can be found in the table below, along with the index and timeframe used for each individual asset class:

Asset Class	Interest	Dividend	Capital Gain	2024 Total Return	Index Data Used
Large Growth		2.00%	9.10%	11.10%	S&P 500 Total Return Index: Dec 1973 - Dec 2023
Large Value		2.00%	9.10%	11.10%	S&P 500 Total Return Index: Dec 1973 - Dec 2023
Mid Cap		2.00%	8.31%	10.31%	Russell Midcap Index: Dec 1995 - Dec 2023
Small Cap		2.00%	8.33%	10.33%	Russell 2000 Index: Dec 1980 -Dec 2023
International Equities		2.00%	6.62%	8.62%	MSCI EAFE Index: Dec 1973 - Dec 2023
Emerging Markets		2.00%	7.45%	9.45%	MSCI Emerging Market Index: Dec 1987 - Dec 2023
Real Estate		2.00%	7.35%	9.35%	MSCI US REIT Index: Dec 2009 - Dec 2023
Government	3.89%		0%	3.89%	10 Year Treasury Bond: Dec 1999 - Dec 2023
Municipal	4.35%		0%	4.35%	Bloomberg Municipal Bond Index: Dec 1999 - Dec 2023
Corporate	4.05%		0%	4.05%	Bloomberg US Aggregate Bond Index: Dec 1999 - Dec 2023
High Yield	6.33%		0%	6.33%	ICE BofA US High Yield Index: Dec 1999 - Dec 2023
International Bonds	4.05%		0%	4.05%	Bloomberg US Aggregate Bond Index: Dec 1999 - Dec 2023
Cash	1.66%		0%	1.66%	3 Month Treasury Bill: Dec 1999 - Dec 2023
Other		2.00%	9.10%	11.10%	Use S&P 500 as Proxy

Forward-Looking Assumptions

The Forward-Looking Assumptions preset contains assumptions derived from JP Morgan's Long-Term Capital Market Assumptions report. Like the historical returns, these figures are updated on an annual basis.

The chart below summarizes the information from JP Morgan's Long-Term Capital Market Assumptions. You can review the detailed report here .

Asset Class	Interest	Dividend	Capital Gain	2024 Total Return
Large Growth		2%	5.00%	7.00%
Large Value		2%	5.00%	7.00%
Mid Cap		2%	5.60%	7.60%
Small Cap		2%	5.20%	7.20%
International Equities		2%	7.70%	9.70%
Emerging Markets		2%	6.80%	8.80%
Real Estate		2%	5.50%	7.50%
Government	3.90%		0%	3.90%
Municipal	4.00%		0%	4.00%
Corporate	5.80%		0%	5.80%
High Yield	6.50%		0%	6.50%
International Bonds	4.00%		0%	4.00%
Cash	2.90%		0%	2.90%
Other		2%	5.00%	7.00%

Customized Returns

The Customized Returns option allows you to enter the interest, dividend and capital gain percentages for each asset class. This option provides the most flexibility, allowing you to manually customize your return percentages.

To customize your assumptions, simply click on the fields you would like to modify and enter your preferred values. Be sure to click the blue Save button in the lower right of the page to lock in your assumptions:

Return Assumption Considerations

Asset return assumptions are a critical component of each and every financial plan, having an impact on tax calculations as well as future growth on invested assets. It is generally recommended to review and update your return assumptions periodically, to ensure robust projections and provide the most value to your clients.

Historical Return Assumptions operate on the premise that historical performance provides reasonable insight into future performance. Using historical data to set return assumptions provides a systematic approach that factors evidence based return expectations into your financial projections.

Forward-Looking Assumptions typically rely only partially on historical data, in combination with expert analysis of current events and other macroeconomic factors. Using forward-looking assumptions is a more modern approach, allowing you to incorporate greater subjectivity into your projections.

In practical terms, the Historical preset in RightCapital is generally more optimistic than the Forward-Looking preset. Most plans will see a higher probability of success with Historical assumptions, and a lower probability with Forward-Looking.

Client-Specific Return Assumptions

Global assumptions in RightCapital are used as a starting point whenever you create a new household. However, within the Gear Icon > Settings > Return Assumptions tab of each client plan, you can choose to change the return assumptions for just that individual plan. Making changes to return assumptions here will not impact your global assumptions or any of your other financial plans:

Note on Firm-Wide Return Assumptions

If your firm has opted to lock in a set of firm-wide return assumptions for all advisors in your organization, you will not have the ability to adjust global or client-specific return assumptions. If this is the case, any questions or requests to change return assumptions should be directed to the administrator of your firm.