The Equity Risk Premium
Research, Analysis, and Expert PerspectivesWhat is the Equity Risk Premium?
At a Glance:
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The Equity Risk Premium (ERP) is the historical or expected excess return of equities over fixed-income assets such as bonds or bills.
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The ERP is centrally important because it helps us decide how much to allocate to each asset class (equities, bonds, etc.) and what to expect from each asset class and from the overall portfolio.
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The ERP cannot be observed in the market and must be estimated. Different users or investors will have different estimates.
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Most current estimates of the ERP are in the range of 3% to 5% (per year geometric mean or compound annual excess return of equities over bonds). Some analysts use higher or lower estimates.
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The ERP varies over time as market prices and other market conditions change. It is important to keep one’s ERP estimate up to date.
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Experts disagree both on how to estimate the ERP and on the best number or range of numbers, and there is no single correct answer.
Investment Icons Debate the Equity Risk Premium
Hosted by CFA Society New York in collaboration with CFA Institute Research and Policy Center, and in honor of the 80th Anniversary of the Financial Analysts Journal and 60th Anniversary of the CFA Institute Research Foundation, this half-day summit (Nov 2025) featured some of the industry’s most renowned luminaries examining Jeremy Siegel’s foundational work Stocks for the Long Run and providing their unique insights about the future of the investment industry. For three decades, the mantra “stocks for the long run” has shaped investment strategy, portfolio construction, and the career paths of finance professionals.
Will Stocks Outperform Again? Inside the Equity Risk Premium Debate
Stocks vs Bonds: The Truth About Long-Term Returns
What Professionals Get Wrong About the Equity Risk Premium
Are Stocks Still Worth It? Future Returns, AI, and Market Reality
Equity Risk Premium Forums
The original that started it all!
2001 forum with Martin Leibowitz (chair), Robert Arnott, Clifford Asness, Ravi Bansal, John Campbell, Bradford Cornell, William Goetzmann, Roger Ibbotson, Rajnish Mehra, Thomas Philips, Stephen Ross, Robert Shiller, and Richard Thaler.
Rethinking the Equity Risk Premium: An Overview and Some New Ideas
2011 forum with articles by P. Brett Hammond and Martin Leibowitz; Roger Ibbotson; Clifford Asness; Elroy Dimson, Paul Marsh, and Mike Staunton; Richard Grinold, Kenneth Kroner, and Laurence Siegel; Robert Arnott; Antti Ilmanen; Peng Chen, CFA; Andrew Ang and Xiaoyan Zhang; Jeremy Siegel; and Rajnish Mehra. Edited by P. Brett Hammond, Martin Leibowitz, and Laurence Siegel.
Revisiting the Equity Risk Premium
2023 forum with Robert Arnott, Clifford Asness, Mary Ida Compton, Elroy Dimson, William Goetzmann, Roger Ibbotson, Antti Ilmanen, Martin Leibowitz, Rajnish Mehra, Thomas Philips, and Jeremy Siegel. Moderated by Laurence Siegel. Book and Video included on this page.
Research Foundation Briefs
Stocks for the Long Run? New Evidence, Old Debates
2025 brief by Paul McCaffrey. This brief reexamines Jeremy Siegel’s “Stocks for the Long Run” thesis in light of Edward McQuarrie’s recent research to explore how investment narratives are built and to encourage a deeper, more skeptical engagement with financial history.
Stocks for the Long Run Revisited: Dividends and “The Return Nobody Got
2026 brief by Paul McCaffrey. Long-run stock returns look extraordinary, yet few investors became rich. This brief explains why dividend reinvestment assumptions overstate historical equity returns, reframing the equity risk premium as “the return nobody got.”
Research Foundation Literature Reviews
The Equity Risk Premium: An Annotated Bibliography
2007 An early effort at cataloging the literature on the ERP, by Zhiyi Song
The Equity Risk Premium: A Contextual Literature Review
2017 A later, more comprehensive review of the ERP literature, by Laurence Siegel
Financial Analysts Journal
When the Equity Premium Was New
New 2026 with Edward F. McQuarrie. Revisiting Edgar Lawrence Smith’s 1924 back tests, this study shows that bonds outperformed stocks during deflationary periods and that the equity premium depends on long-term inflation and deflation trends.
Stocks for the Long Run? Sometimes Yes, Sometimes No
2023 article with Edward F. McQuarrie. Edward analyzes historical data on 19th-century U.S. stock and bond returns. The study challenges Jeremy Siegel’s Stocks for the Long Run thesis, indicating that 20th-century U.S. asset returns cannot be generalized out of sample.
Stocks for the Long Run
2024 Panel Discussion with Edward McQuarrie, Jeremy Siegel, Rob Arnott, Roger Ibbotson, Elroy Dimson, and Laurence Siegel
The Equity Risk Premium: Essays and Explorations
2007 Book Review by William Goetzmann and Roger Ibbotson, reviewed by Marc Rzepczynski (2007).
