over the past 12 months has made valuations in expectations are 2.25 percentage points higher those regions more attractive. We now expect than they were at this time last year. Within the similar returns to those of non-U.S. developed U.S. market, value stocks are fairly valued relative markets and view emerging markets as an to growth, and small-capitalization stocks are important diversifier in equity portfolios. attractive despite our expectations for weaker near-term growth. Our outlook for the global From a U.S. dollar investor’s perspective, the equity risk premium is still positive at 1 to 3 VCMM projects higher 10-year annualized returns percentage points, but lower than last year for non-U.S. developed markets (7.2%–9.2%) because of a faster increase in expected and emerging markets (7%–9%) than for U.S. bond returns. markets (4.7%–6.7%). Globally, our equity return 6