Speaking at the National Association of Pension Funds investment conference in Edinburgh, Emeritus Professor Paul Marsh predicted that real returns from global equities would be "a little over 3%" over the next 30 years.
"Marginally positive" real bond returns could be expected, he said, with those from cash being negative in real terms.
Paul Marsh, Emeritus Professor of Finance at London Business School said: “People have come to view the returns investors have enjoyed from equities during the second half of the 20th century, as normal.
“Since 1950 global investors have benefited from wonderful real equity returns of 6.8% per annum with the generation born from 1980 seeing incredibly high real bond returns of 6.4% per year, while cash has generated real returns of 2.7% since 1980.”
But Emeritus Professor Marsh said lower real equity returns would result from lower interest rates, warning fund managers: "This is not a prediction for the rest of this year or the next five years, but the next 30 years. As an industry you should not be in denial nor should you bank on equities to bail you out.
“These projections still imply that investors can expect (but with no guarantees) that equities will double, relative to cash over the next 20 years.”
The research on which these projections are based was conducted with Elroy Dimson and Mike Staunton and published in their recent Credit Suisse Global Investment Returns Yearbook 2013.