Vanguard, the second largest asset manager in the U.S., expects higher risks and lower returns in financial markets next year.
“We anticipate a bit more volatility and an uptick in inflation in the year ahead, accompanied by more muted equity returns,” said Joseph Davis, Vanguard’s chief economist and investment strategy group head, in a statement accompanying the firm’s 2018 market outlook.
In what it termed its “most subdued” market outlook in a decade, Vanguard forecast a 3% to 5% return in U.S. equities — down sharply from the 10% annualized rate over the past 30 years — and a 5.5% to 7.5% gain in foreign equities. Fixed income assets are expected to return 2% to 3%.
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