IN FOCUS6-8 min read
Schroders Equity Lens September 2026: your go-to guide to global equity markets
What is the outlook for equity returns relative to bonds?
Lees volledig rapportSchroders Equity Lens - September 2026
68 Pagina's
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The September 2026 edition of the Schroders Equity Lens is now available: Schroders Equity Lens
Summary:
Big question for investors: by how much do you expect equities to outperform government bonds over the long-run? (slides 6-15)
- Over 155 years of history, they have outperformed by 4.8% a year in the US
- But starting point matters: outcomes on a 10-year horizon vary substantially from 4.8%
- Relative valuations matter: equities outperform bonds by more when their “earnings yield” is high vs bond yields
- “Yield gap” is low right now, a negative signal about equities’ relative prospects over the medium to long term
- But there are 10yr periods when this metric is low yet equities still did well. What was behind these “surprises”?
- usually strong real EPS growth, valuations often declined
- Current consensus US EPS forecasts are high in nominal and real terms; long-term growth forecast is higher even than in the Dotcom era:
- 32% 2026, 16% 2027, 16% 2028, 25% long-term (2029-30)
- If allow for these, expected outperformance of US equities over bonds has been on an increasing trend, even as bond yields have risen
- Realised and forecast earnings still have positive momentum and the equity-bull story can remain intact so long as this continues
- 2026 performance recap (slide 20):
- Value > growth
- EM, Japan > US
- In the US: small cap > large cap, Magnificent-7 underperforming
- Confounding popular narratives, UK and European value stocks have outperformed the S&P 500 over 1, 3, 5 years (slide 21)
- Despite mega cap cheapening, aggregate valuations remain high in most markets, across most valuation metrics (slides 18-19).
- EM stands out as cheap on a forward P/E basis. This hinges on whether sky-high consensus earnings growth forecasts materialise (slide 16)
Chart of the month:
Lees volledig rapportSchroders Equity Lens - September 2026
68 Pagina's
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