Forecasting ten year return and volatility for the CSI 300 index

A cautious and systematic assessment of potential returns over the next decade suggests that China A-Shares, may still offer similar return potential as U.S. Equities.

Overview

A cautious and systematic assessment of potential returns over the next decade suggests that China A-Shares, represented by the CSI 300 Index throughout this paper, may still offer similar return potential as U.S. Equities, represented by the S&P 500 Index throughout this paper. Please note that this comparison refers to market forecasts created by consistently applying the DWS Long View forecasting methodology to China A-Shares
and the S&P 500 Index framework in tandem. Furthermore, China A-Shares may act as a portfolio diversifier given their historically low correlation to U.S. equities.

When it comes to long-term investment in China A-Shares, global investors may want to consider thinking about the market using the framework outlined in the DWS Long View for calculating long run return and volatility assumptions. From a return perspective, the Long View uses an intricate build-up or pillar approach to forecast ten year total returns for various markets. The three pillars that the approach uses to derive long run return potential expectations are income, growth and valuation.

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