While small-cap stocks have had an excellent run, top value investor Jeremy Grantham and his firm aren’t too high on the little guys going forward.

GMO, Grantham’s firm, has released its new seven-year asset class projections, and the “latest calculations predict that investors in U.S. small-cap stocks will actually lose about a fifth of their money in real terms over the next seven or so years,” reports MarketWatch’s Brett Arends. “That’s an annualized loss of about 2.8% after inflation.”

Grantham’s firm continues to see the best equity opportunities in high-quality firms, which Grantham has defined as those with “high, stable return and low debt”. GMO is projecting such stocks to average real, after-inflation returns of 4.6% per year over the next seven years. It also sees some of the higher equity returns coming from emerging markets, which it  projects will average 4.3% real annual returns over that period.

In terms of bonds, GMO is forecasting pretty meager returns. It expects U.S. bonds to average 0.6% per-year gains over the next seven years, and international bonds to lose 0.5% per year. Emerging debt should gain 1.7% per year, the firm predicts.

One area GMO continues to be bullish on: timber, which it predicts will gain 6.0% per year over the next seven years.