If you invest your whole portfolio in a single 10Y Treasury bond today (let's call it intermediate gov bond asset class), in 8 years you will only hold 2Y treasury bond, so your portfolio will drift from intermediate gov bonds to short term government bonds, and hence your annualized return of 2.5% percent will show return of a portfolio which drifts from intermediate treasury to essentially cash (before maturing). It will be by no means a return of a 10Y treasury bond asset class. Now, a fund investing in intermediate gov bonds will roll low duration securities into new 10Y securities to maintain asset class structure. The resulting return will be a mix of effects from yield curves and paths, and most definitely will not be 2.5%.

Pretty much the same thing, i.e. asset class drift, will happen to most small cap, or growth stocks or any other portfolio without rebalancing.

And while 1% return for equities over the next 10 years is quire believable (given current valuations), there is a good deal of chance that returns exactly 10 years from now will be anything BUT 1% (nor 6-8%). So anyone really wishing to have a believable forecast of what will be long term return of various asset classes would require much more sophisticated tools.

But then, "I've see rich businesspersons; I've see rich speculators; but I've never seen a rich forecaster." @nntaleb