ClearMacro - How we do it - Long-Term Framework - 3-5+ Year Return Estimates

THE LONG-TERM FRAMEWORK ANCHORS ClearENGINE AND IS DRIVEN BY 3-5+ YEAR RETURN ESTIMATES.

Consistent methodology across asset classes based on:

Income + Growth + Valuation.

Equity: dividends, value factors, inflation and growth estimates, profit margin adjustments.
Credit: spread rolls, default probabilities, rating transitions, liquidity, etc.
Govt Bonds: curves/roll, carry, valuation/duration adjustments, “through the cycle” inflation, etc.
Commodities: real valuation factor, backwardation/contango, collateral yields.
FX: relative inflation and growth, value factors, external sustainability measures.

Long-term return estimates are standardized across assets and markets by transforming them into time-varying excess return estimates.

Adjusting for risk, they are expressed as Investment Ratings, that rank the investment universe on Absolute/Relative Value.