Timely insights and observations

Our 2022 Vanguard Economic and Market Outlook focuses on new sources of risk for the economy and financial markets, including stretched valuations for equity markets, rising interest rates, and an uncertain inflationary environment.

Semiconductor shortages have been making an impact around the world. From a credit perspective, though, we are cautious on the semiconductor industry. With bond valuations of chip manufacturers becoming extremely tight, we see more value downstream among their customers, especially industrial equipment manufacturers. 

Vanguard research suggests that the office is not going away, it’s evolving. Investing in office space, though more complex, may give active managers with deep fundamental analysis capabilities opportunities for outperformance. The return to work is likely to result in a new office normal that will vary by region, industry sector, and property class.

Vanguard offers perspective on U.S. stock valuations, the next peak in the Federal Reserve’s target for short-term interest rates, the property sector in China, and the COVID-19 Omicron variant.

Personalized, realistic projections of longevity and health care costs in retirement could provide a better foundation for planning than conservative assumptions.

A recently updated Vanguard research paper on paying for college discusses why it’s important for parents and students to plan strategically and understand how their spending decisions affect their broader financial situation. 

Higher yields can lead to improved total returns from bonds if an investor’s horizon exceeds their bond portfolio’s duration.

Comparing today’s environment with that of the 1970s overlooks a key difference: today’s strong demand for labor.

China’s economy has grown since the 1990s from being a tenth of the size of the U.S. economy to close to two-thirds the size. This raises some natural questions, including, “When might China become the world’s largest economy?” and “What are the potential portfolio implications of such a new economic order?”

Vanguard research found that it would take considerably more inflation than we’re expecting to diminish the diversifying power of bonds in a balanced portfolio.

New research finds that global trade growth is likely to slow—but not contract—in the decade ahead. What’s more, we believe the implications for investors may not be as great as they seem. 

Markets weren’t too surprised to see a run-up in inflation in much of the world in 2021. But readings have been hotter than forecast. With accommodative monetary and fiscal policies expected to remain in place for some time, could elevated rates of inflation persist in 2022 and beyond?

Analysts in our Fixed Income Group examine the market of crossover bonds—investment-grade bonds recently downgraded to high yield (fallen angels) and their opposite (rising stars). Such issues, which ballooned amid a wave of credit-quality downgrades in the pandemic’s opening days, historically have offered attractive risk-adjusted returns.

The forecasts by Vanguard's global economics and markets team inform the longer-term allocation decisions in our multiasset and advice offers. We hope they also help clients set their own reasonable expectations.

A Vanguard survey of nearly 2,500 investors found a tendency to underestimate the financial risks of cognitive decline, particularly among women. We discuss the implications for investors and their agents and advisors. 

Vanguard assesses the fixed income ecosystem during the height of the COVID-19 volatility, including the liquidity crush and investors’ “dash for cash,” and offers high-level policy recommendations for the path forward.

A strong upswing in U.S. employment should unfurl in the coming months, paving the way for a full labor market recovery by mid-2022. Josh Hirt, a Vanguard economist, explains.  

The economy and markets have recovered at a faster-than-anticipated pace from the pandemic. But the global outlook continues to hinge on health outcomes, according to Vanguard’s midyear forecasts.

With net interest income—traditionally banks’ bread-and-butter business—continuing to decline, many bankers have been trying to adapt by seeking revenue opportunities elsewhere. New business models, though, have brought new challenges in assessing their credit fundamentals.

Sara Devereux became global head of Vanguard Fixed Income Group (FIG) on July 1, 2021, succeeding John Hollyer, who stepped down after more than 30 years at Vanguard. In this interview, the two leaders join Vanguard Chief Investment Officer Greg Davis in a discussion about the bond market, Sara's plans for FIG, and John's extraordinary Vanguard career.

John James, head of Vanguard Institutional Investor Group, looks back at the 20-year history of How America Saves. Our seminal report has provided key insights on the defined contribution landscape and ultimately helped to improve investors’ retirement readiness.

Vanguard believes that environmental, social, and governance (ESG) risks can have a material impact on the long-term investment success of our fund’s shareholders. We explain how ESG considerations are incorporated into our product launch decisions and investment strategies.

As newly vaccinated individuals unleash their pent-up demand for goods and services, questions naturally arise about resurgent inflation and interest rates, and what central banks will do next. Our research indicates that central bank policy rates and interest rates more broadly are likely to rise, but only modestly, in the next several years.

Given low bond yields and high stock valuations, shortfall risk is almost a given in today’s market. We explore factors that influence the ability of investors and institutions to meet their financial goals and discuss circumstances in which private equity could help. 

Value stocks have lagged growth stocks for the past 10 years, but a relative-performance reversal could be in the offing. Value could outperform growth over the next decade by as much as 5% to 7% per year, according to Vanguard research.

In this blog, Vanguard Global Chief Economist Joe Davis explains why inflation has been heading higher, why persistent inflation is a threat, and the implications for Federal Reserve policy.

Vanguard Americas Chief Economist Roger Aliaga-Díaz addresses three common bond myths and discusses why fixed income can still make sense amid rising rates and inflation.  

Recognizing that many investors are concerned about inflation and considering options to help maintain the real values and yields of their portfolios, we look at the prospects for inflation over shorter and longer horizons and the case for investing in U.S. Treasury Inflation-Protected Securities.

Vanguard’s credit team evaluates the decline in corporate leverage from its highs during the COVID-19 pandemic, and concludes that the worst in terms of credit deterioration is likely behind us. 

One year after a COVID-19-driven spike in market volatility, a Vanguard ETF capital markets specialist, David Sharp, reflects on the resilience that ETFs displayed—and highlights bond ETFs’ critical role as a source of market liquidity.

Cryptocurrencies have attracted much attention and more than trace amounts of speculation. Roger Aliaga-Díaz, our chief economist for the Americas and head of portfolio construction, cautions investors, noting among other risks that cryptocurrencies are largely unregulated.

The Federal Reserve left its target for the benchmark federal funds rate unchanged at its March 17 meeting. Its approach to inflation and the labor market means rate hikes may be a way off.

Vanguard’s head of factor-based strategies discusses Vanguard research about the role daily portfolio rebalancing can play in capturing the potential benefits of investing in stocks with high degrees of exposure to value, quality, and momentum characteristics.

It’s hard to identify an asset bubble before it bursts. But Vanguard Global Chief Economist Joe Davis wonders about the valuations of cryptocurrencies and low-quality growth stocks. Ultimately, he argues, valuations should reflect “plausible future income” scenarios.

Conventional wisdom cautions against trading ETFs near the beginning or end of the trading day. But our research suggests this may be only half true. Here are some best practices that we believe can help ensure trades are executed at the best available price.