Pacific Investment Management Co., manager of the world’s largest mutual fund, said returns from U.S. equities will decline from their historic averages over the next decade as the U.S. economy grows at a slower pace.

Equities will return an annualized 4 percent to 5.1 percent over the coming five to 10 years, down from their historical rate of almost 10 percent, Saumil Parikh, a portfolio manager who leads Newport Beach, California-based Pimco’s cyclical forum, said in a November asset allocation report being posted on the firm’s website. .

“If investment in the U.S. economy does not pick up substantially over the next five to 10 years, the unsustainability of large public sector deficits will put tremendous pressure on corporate profits and their ability to keep up with nominal GDP growth,” Parikh said.

Bill Gross, Pimco’s founder and co-chief investment officer, said in his August investment outlook that the cult of equity was dying and returns of 6.6 percent above inflation, known as the Siegel Constant, wouldn’t be seen again. In his September outlook he said stocks would still outperform bonds, even as returns for both would be stunted.

Pimco, home to the $281 billion Pimco Total Return Fund, started offering equity funds almost three years ago with the opening of its EqS Pathfinder Fund.

The U.S. will have slower economic growth because there will be more retirees than workers and productivity will decline because of less investment, Parikh said. Growth in nominal gross domestic product will slow to 4 percent to 5 percent from an average of 6.4 percent over the past 110 years, he said.

“These forecasts reflect the environment of financial repression the U.S. economy finds itself in today due to deleveraging, and one that we see persisting to some degree over the next five to 10 years,” he wrote.