Following the release of Schroders Equity Lens for September 2026, Duncan Lamont, Head of Strategic Research provides a summary of it’s findings.
To view the full September 2026 edition of the Schroders Equity Lens, click here: Schroders Equity Lens – September 2026
Summary of Schroders Equity Lens for September 2026:
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)
View the full September 2026 edition of the Schroders Equity Lens here: Schroders Equity Lens – September 2026
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The writer’s views are their own and do not constitute financial advice.
This information should not be relied upon by retail clients or investment professionals. Reference to any particular investment does not constitute a recommendation to buy or sell the investment.
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