Vanguard Sees Below Average Returns Ahead for US Stocks Due to High Valuations, Rising Rates
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Valuations are too high after a decade of outperformance compared to international stocks
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The equity risk premium in the US market is around 2 percentage points lower than historical average
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Interest rates have risen aggressively, reducing the relative attractiveness of stocks vs bonds
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Vanguard forecasts below average returns for US stocks of 4.7-6.7% over next few years
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Weekly flows into US equity funds have turned slightly negative in recent weeks