BlackRock Inc, the world's largest asset manager, on Monday cut its expectations on the five-year returns on U.S. investments, in particular bonds, which would lose money.

In a traditional U.S. model portfolio with 60 percent of money in stocks and 40 percent in bonds, investors would see an annual return of less than 3 percent over the next five years. Adjusted for inflation, they would see less than 1 percent, Richard Turnill, BlackRock's global chief investment strategist, wrote in a research note.

"Generating returns is likely to be particularly challenging for investors in U.S. assets," Turnill said.

A global model portfolio with the same split between stocks and bonds would fare marginally better, fetching a 3.3 percent return in U.S. dollars.

"Our international equity return estimates are now above the long-term average, thanks to improved valuations outside the U.S.," he said.

Longer-dated U.S. Treasuries and euro zone bonds would be a drag on portfolios, with their expected returns treading in negative territory over the next five years.

"These assets are still important portfolio diversifiers, but the price of that diversification is rising," Turnill said.