U.S. equities forecast to consistently underperform over a prolonged period, according to Vanguard's president, bucking prevalent market assumptions.
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In a significant move, Vanguard, one of the world's largest investment management companies, has recommended a substantial portfolio reallocation for the next decade. The new strategy suggests a 60% allocation to bonds, 20% to international equities, and only 20% to U.S. stocks.
This shift away from heavy U.S. equity exposure towards bonds and international stocks is a response to subdued U.S. equity return forecasts and macroeconomic uncertainty. Gregory Davis, the president and chief investment officer of Vanguard, predicts U.S. equity market returns to be much lower over the next decade, at between 3.8% and 5.8% (midpoint of 4.8%).
Bonds, according to Vanguard, now offer returns comparable to equities (about 4-5%) but with much lower volatility, making them a more attractive anchor for portfolios going forward. International equities, on the other hand, are expected to produce around 7% annual returns over the next decade, favored over U.S. stocks due to better valuation and growth prospects.
Davis argues that corporate profits have been abnormally high and aren't likely to continue at that pace. He suggests investors should put 60% of their portfolios in bonds, 20% in foreign stocks, and only 20% in U.S. stocks over the next 10 years.
Vanguard suggests ETFs such as the FTSE All World ex US ETF (VEU) for international equity exposure and Total World Bond ETF (BNDW) for bond exposure to achieve this allocation.
The classic portfolio makeup of 60% stocks and 40% bonds has fallen out of whack for investors who haven't rebalanced their holdings amid the longstanding equities bull market. This new strategy by Vanguard aims to better balance risk and return expectations by leaning on fixed income and global diversification rather than an over-concentration in U.S. stocks.
Elsewhere in the crypto space, STON.fi Dev has raised $9.5 Million in Series A funding, while VeraNet has launched a decentralized AI ecosystem with community-controlled tools and services. Queens Park Rangers and TokenFi have announced a new partnership, and JPMorgan Chase is considering allowing clients to borrow against their crypto assets.
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In other news, DeepSnitch has introduced five specialized AI agents as their token presale goes live. Naoris Protocol has announced an upcoming token generation event for NAORIS, and Shinkai has launched Version 1.0 - on-chain AI agents are now live with USDC and Coinbase x402.
Meanwhile, Ethereum co-founder Joseph Lubin discusses why ETH lagged behind for years, and an analyst predicts rallies for XRP, ADA, DOGE, and two additional altcoins amid $74,500,000,000 capital inflows into crypto.
In a separate incident, a report states that a Bank of America customer has $219,000 stolen from their account by a woman allegedly using fictitious identities.
Lastly, Pepescape Crypto presale has raised $1 Million.
Stay tuned for more updates from the world of finance and cryptocurrency.
- Given the new portfolio strategy from Vanguard, some investors might consider diversifying their investment beyond traditional stocks and bonds, such as exploring cryptocurrency and altcoins, as they offer potential high returns and growth prospects.
- With Vanguard recommending bond ETFs like the Total World Bond ETF (BNDW) for portfolio balance, one could wonder if there are similar investment options for altcoins and other digital assets, given the increasing interest in the blockchain and cryptocurrency business.
- As the crypto space continues to evolve, it's essential for investors to stay informed about emerging opportunities, like the token presales for DeepSnitch and Pepescape Crypto, and be aware of potential risks, such as the reported bank account theft due to fraudulent activities.
