| Asset class | Return forecast range |
Median volatility |
| U.S. equities | 2.8%–4.8% | 15.1% |
| Global ex-U.S. equities (unhedged) | 4.9%–6.9% | 18.8% |
| Developed markets ex-U.S. equities (unhedged) | 5.3%–7.3% | 18.1% |
| Emerging markets equities (unhedged) | 3.2%–5.2% | 25.4% |
| U.S. value | 5.3%–7.3% | 18.6% |
| U.S. growth | 1.3%–3.3% | 16.2% |
| U.S. large-cap | 2.7%–4.7% | 15.0% |
| U.S. small-cap | 4.3%–6.3% | 19.8% |
| U.S. REITs | 2.6%–4.6% | 18.% |
| U.S. aggregate bonds | 3.8%–4.8% | 6.2% |
| Global ex-U.S. aggregate bonds (hedged) | 4.4%–5.4% | 5.0% |
| U.S. Treasury bonds | 3.7%–4.7% | 6.7% |
| U.S. short-term Treasury bonds | 3.0%-4.0% | 1.9% |
| U.S. intermediate-term Treasury bonds | 3.1%-4.1% | 5.4% |
| U.S. long-term Treasury bonds | 4.9%-5.9% | 10.4% |
| U.S. credit | 3.9%–4.9% | 6.5% |
| U.S. high-yield corporate bonds | 4.5%–5.5% | 9.7% |
| Emerging markets sovereign bonds (hedged) | 5.2%–6.2% | 10.9% |
| U.S. TIPS | 2.7%–3.7% | 5.0% |
| U.S. mortgage-backed securities | 4.3%–5.3% | 4.1% |
| U.S. municipal bonds | 3.2%–4.2% | 4.8% |
| U.S. high-yield municipal bonds | 3.9%–4.9% | 7.8% |
| U.S. cash | 2.9%–3.9% | 1.1% |
| U.S. municipal cash | 2.4%–3.4% | 0.5% |
| Commodities | 4.6%–6.6% | 16.7% |
| U.S. inflation | 1.6%–2.6% | 1.8% |
| Vanguard U.S. dollar index | Negative 0.8%–positive 0.2% | 8.3% |
| Asset class | Return range | Median volatility |
| Mexican equities | 6.3%–8.3% | 25.2% |
| Global ex-Mexico equities (unhedged) | 6.5%–8.5% | 16.7% |
| U.S. equities (unhedged) | 5.6%–7.6% | 17.3% |
| Developed markets ex-U.S. equities (unhedged) | 8.2%–10.2% | 19.2% |
| Mexican sovereign bonds | 8.9%–9.9% | 8.8% |
| Global aggregate bonds (hedged) | 6.8%–7.8% | 5.9% |
| Asset class | Return range | Median volatility |
| Brazilian equities | 10.4%–12.4% | 20.8% |
| Global ex-Brazil equities (unhedged) | 11.3%–13.3% | 27.5% |
| U.S. equities (unhedged) | 10.4%–12.4% | 28.7% |
| Brazilian 3-year government bond | 14.6%–15.6% | 11.0% |
| Global aggregate bonds (hedged) | 17.1%–18.1% | 8.1% |
| Asset class | Return range | Median volatility |
| Euro area equities | 4.7%–6.7% | 20.3% |
| Global ex-euro area equities (unhedged) | 3.9%–5.9% | 18.2% |
| US equities (unhedged) | 3.2%–5.2% | 18.7% |
| Euro area aggregate bonds | 2.8%–3.8% | 5.8% |
| Global ex-euro area aggregate bonds (hedged) | 2.5%–3.5% | 5.6% |
| Asset class | Return range | Median volatility |
| UK equities | 4.6%–6.6% | 18.8% |
| Global ex-UK equities (unhedged) | 4.0%–6.0% | 17.8% |
| US equities (unhedged) | 3.1%–5.1% | 18.5% |
| UK aggregate bonds | 4.8%–5.8% | 7.1% |
| Global ex-UK aggregate bonds (hedged) | 3.9%–4.9% | 5.3% |
| Asset class | Return range | Median volatility |
| Chinese equities | 3.4%–5.4% | 24.8% |
| Global ex-China equities (unhedged) | 3.7%–5.7% | 14.8% |
| U.S. equities (unhedged) | 2.9%–4.9% | 15.4% |
| Chinese aggregate bonds | 1.5%–2.5% | 4.1% |
| Global aggregate bonds (hedged) | 2.4%–3.4% | 5.2% |
Disclosure, notes, and sources to be included with VCMM forecasts
IMPORTANT: The projections and other information generated by the VCMM regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Distribution of return outcomes from VCMM are derived from 10,000 simulations for each modeled asset class. Simulations as of May 31, 2025. Results from the model may vary with each use and over time. For more information, please see the Notes section below.
Notes: These return assumptions depend on current market conditions and, as such, may change over time. We make our updated forecasts available at least quarterly.
Source: Vanguard.
Methodology content to be included with VCMM forecasts
About the Vanguard Capital Markets Model
The asset-return distributions shown here are in nominal terms—meaning they do not account for inflation, taxes, or investment expenses—and represent Vanguard’s views of likely total returns, in U.S. dollar terms, over the next 10 years; such forecasts are not intended to be extrapolated into short-term outlooks. Vanguard’s forecasts are generated by the VCMM and reflect the collective perspective of our Investment Strategy Group. Expected returns and median volatility or risk levels—and the uncertainty surrounding them—are among a number of qualitative and quantitative inputs used in Vanguard’s investment methodology and portfolio construction process. Volatility is represented by the standard deviation of returns.
IMPORTANT: The projections and other information generated by the Vanguard Capital Markets Model (VCMM) regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. VCMM results will vary with each use and over time.
The VCMM projections are based on a statistical analysis of historical data. Future returns may behave differently from the historical patterns captured in the VCMM. More importantly, the VCMM may be underestimating extreme negative scenarios unobserved in the historical period on which the model estimation is based.
The Vanguard Capital Markets Model® is a proprietary financial simulation tool developed and maintained by Vanguard's primary investment research and advice teams. The model forecasts distributions of future returns for a wide array of broad asset classes. Those asset classes include U.S. and international equity markets, several maturities of the U.S. Treasury and corporate fixed income markets, international fixed income markets, U.S. money markets, U.S. municipal bonds, commodities, and certain alternative investment strategies. The theoretical and empirical foundation for the Vanguard Capital Markets Model is that the returns of various asset classes reflect the compensation investors require for bearing different types of systematic risk (beta). At the core of the model are estimates of the dynamic statistical relationship between risk factors and asset returns, obtained from statistical analysis based on available monthly financial and economic data from as early as 1960. Using a system of estimated equations, the model then applies a Monte Carlo simulation method to project the estimated interrelationships among risk factors and asset classes as well as uncertainty and randomness over time. The model generates a large set of simulated outcomes for each asset class over time. Forecasts represent the distribution of geometric returns over different time horizons. Results produced by the tool will vary with each use and over time.
The VCMM’s primary value is its utility in analyzing potential investor portfolios. VCMM asset-class forecasts—comprising distributions of expected returns, volatilities, and correlations—are key to the evaluation of potential downside risks, risk-return trade-offs, and the diversification benefits of various asset classes. Although central tendencies are generated in any return distribution, Vanguard stresses that focusing on the full range of potential outcomes for the assets considered is the most effective way to use VCMM output.
The VCMM seeks to represent the uncertainty inherent in forecasting by generating a wide range of potential outcomes. The VCMM does not impose “normality” on expected return distributions but rather is influenced by the so-called fat tails and skewness of modeled asset-class returns. Within the range of outcomes, individual experiences can be quite different, underscoring the varied nature of potential investment outcomes. Indeed, this is a key reason why we approach asset-return outlooks in a distributional framework.
Indexes content to be included with VCMM forecasts
Indexes for VCMM simulations
The long-term returns of our hypothetical portfolios are based on data for the appropriate market indexes as of September 30, 2025. We chose these benchmarks to provide the most complete history possible, and we apportioned the global allocations to align with Vanguard’s guidance in constructing diversified portfolios.
Asset classes and their representative forecast indexes are as follows:
United States (U.S. dollar)
Equities
U.S. equities: MSCI US Broad Market Index
Global ex-U.S. equities (unhedged): MSCI All Country World ex USA Index
Developed markets ex-U.S. equities (unhedged): MSCI World ex USA Index
Emerging markets equities (unhedged): MSCI Emerging Markets Index
U.S. value: Stocks with a price/book ratio in the lowest one-third of the Russell 1000 Index[1]
U.S. growth: Stocks with a price/book ratio in the highest one-third of the Russell 1000 Index[2]
U.S. large-cap: Stocks with a market cap in the highest one-third of the Russell 1000 Index[3]
U.S. small-cap: Stocks with a market cap in the lowest two-thirds of the Russell 3000 Index[4]
U.S. REITs: FTSE Nareit All REITs Index
Fixed income
U.S. aggregate bonds: Bloomberg US Aggregate Index
Global ex-U.S. aggregate bonds (hedged): Bloomberg Global Aggregate ex USD Index USD Hedged
U.S. Treasury bonds: Bloomberg US Treasury Index
U.S. short-term Treasury bonds: Bloomberg US 1-5-Year Treasury Bond Index
U.S. intermediate-term Treasury bonds: Bloomberg US Treasury: Intermediate Index
U.S. long-term Treasury bonds: Bloomberg US Treasury: Long Index
U.S. credit: Bloomberg US Credit Index
U.S. high-yield corporate bonds: Bloomberg US Corporate High Yield Index
Emerging markets sovereign bonds (hedged): Bloomberg Emerging Markets USD Sovereign Bond Index - 10% Country Capped USD Hedged
U.S. TIPS: Bloomberg US Treasury Inflation Protected Securities Index
U.S. mortgage-backed securities: Bloomberg US Mortgage Backed Securities Index
U.S. municipal bonds: Bloomberg Municipal Bond Index
U.S. high-yield municipal bonds: Bloomberg Municipal Bond: High Yield Index
U.S. cash: U.S. 3-Month Treasury—constant maturity
U.S. municipal cash: Bloomberg Municipal Short-Term Index
Commodities
Commodities: Bloomberg Commodity Index
Inflation
U.S. inflation: Consumer Price Index for all Urban Consumers
Currencies
Vanguard U.S. dollar index: Equity market-capitalization-weighted basket of the U.S. dollar against the euro and the British pound.
Mexico (Mexican peso)
Equities
Mexican equities: MSCI Mexico Total Return Index
Global ex-Mexico equities (unhedged): MSCI All Country World ex Mexico Total Return Index
U.S. equities (unhedged): MSCI US Broad Market Index
Developed markets ex-U.S. equities (unhedged): MSCI World ex USA Index
Fixed income
Mexican sovereign bonds: S&P/BMV Sovereign MBONOS Bond Index
Global aggregate bonds (hedged): Bloomberg Global Aggregate Index MXN Hedged
Brazil (Brazilian real)
Equities
Brazilian equities: MSCI Brazil Total Return Index
Global ex-Brazil equities (unhedged): MSCI All Country World ex Brazil Total Return Index
U.S. equities (unhedged): MSCI US Broad Market Index
Fixed income
Brazilian 3-year government bond: Brazilian 3-year constant maturity government bond index
Global aggregate bonds (hedged): Bloomberg Global Aggregate Index BRL Hedged
Euro area (euro)
Equities
Euro area equities: MSCI European Economic and Monetary Union (EMU) Total Return Index
Global ex-euro area equities (unhedged): MSCI All Country World ex EMU Total Return Index
US equities (unhedged): MSCI US Broad Market Index
Fixed income
Euro area aggregate bonds: Bloomberg Euro-Aggregate Index
Global ex-euro area aggregate bonds (hedged): Bloomberg Global Aggregate ex Euro Index Euro Hedged
United Kingdom (British pounds)
Equities
UK equities: MSCI UK Total Return Index
Global ex-UK equities (unhedged): MSCI All Country World ex UK Total Return Index
US equities (unhedged): MSCI US Broad Market Index
Fixed income
UK aggregate bonds: Bloomberg Sterling Aggregate Index
Global ex-UK aggregate bonds (hedged): Bloomberg Global Aggregate ex Sterling Index GBP Hedged
China (renminbi)
Equities
Chinese equities: MSCI China A Onshore Total Return Index
Global ex-China equities (unhedged): MSCI All Country World ex China Total Return Index
U.S. equities (unhedged): MSCI US Broad Market Index
Fixed income
Chinese aggregate bonds: Bloomberg China Aggregate Index
Global aggregate bonds (hedged): Bloomberg Global Aggregate Index CNY Hedged
[1] To generate our proxy for U.S. value, we sort the stocks in the index according to their price/book ratios and delete the highest two-thirds. We then market cap-weight the remaining portfolio of stocks.
[2] To generate our proxy for U.S. growth, we sort the stocks in the index according to their price/book ratios and delete the lowest two-thirds. We then market cap-weight the remaining portfolio of stocks.
[3] To generate our proxy for U.S. large-cap, we sort the stocks in the index according to their market capitalizations and delete the lowest two-thirds. We then market cap-weight the remaining portfolio of stocks.
[4] To generate our proxy for U.S. small-cap, we sort the stocks in the index according to their market capitalizations and delete the highest one-third. We then market cap-weight the remaining portfolio of stocks.