“We're cautiously optimistic,” Joe Davis, Vanguard's chief economist, said Thursday at Morningstar Inc.'s ETF Invest Conference in Chicago. “There are significant downside risks to the long term in the short term, but over the next five to 10 years, we expect to break through this cycle of low growth.”
Mr. Davis is optimistic because he sees investments by U.S. corporations, which are currently at the lowest levels since the 1930s, picking up again to invest in new technologies such as 3-D printing and nanotechnology.
The “share of economy dedicated to investments is the lowest we've seen in a generation,” he said. “It's not sustainable. Eventually, investment has to rebound, and that's a sustainable driver of growth for the economy.”
Heidi Richardson, global investment strategist at BlackRock, was equally bullish on the long-term prospects of the U.S.
“Fundamentally, everything is in place for continued growth in the U.S.,” she said at the conference.
BlackRock is currently overweight cyclical stocks such as materials, and underweight defensive sectors such as utilities, because of their high valuations.
While Ms. Richardson is bullish on the U.S., she's even more bullish on emerging markets.
“We favor emerging markets over developed markets for the next five years, not only in equities but bonds, as well,” she said.