Jeremy Siegel, Rob Arnott and Other Experts Forecast Equity Returns

A forecast of the equity risk premium (ERP) tells you how much to save, how to allocate assets between equities and fixed income, and how much you can consume. Given its great importance, the CFA Institute recently convened a group of top-level academics and practitioners to forecast future ERPs – and to reflect on similar predictions they had made a decade ago.The ERP is defined as the total return, including dividends, that one can expect from a stock index over the long term, minus the expected return or yield on a riskless bond, typically a 10-year U.S. Treasury bond. It is what investors require or expect as compensation for taking the risk of equities instead of investing in (presumably) default-free bonds.I was honored to be a part of the group the CFA Institute employed in this project. I’ll discuss what I and the other experts foresaw, and then turn to the implications for advisors in their financial planning and asset management practices.


Jeremy Siegel, Rob Arnott and Other Experts Forecast Equity Returns