This is a bit of an anxiety post, but has anyone done or read any research into index fund asset performance during periods of high valuations? The reading and consumption I've done suggest that asset valuations are currently very high, indicating future performance is likely to be poor. In this environment, especially with macroeconomic conditions likely to create elevated inflation, it seems like value stocks are likely to over perform relative to 'growth'/current highly valued stocks.
So the questions; when backdated studies/comparisons have been done that have shown index funds to be a strong choice for the average investor, has that accounted for investing during the above situations?
I get that over time those stocks that are highly valued and under perform will eventually fall down in asset allocation, so the problem will eventually self correct. But when we look at the strength in index fund performance over a 30/50/70 year period, does that hold true through this process?
How exposed are VAS/VGS to these highly valued/growth stocks? Does anyone have a good index/asset group to compare S&P500/MSCI int (exc Aus) against for the 70's & 80's?
With the bog standard 70/30 VGS/VAS allocation, does it make sense add/weight towards a value factor tilt ETF (or EM)? Or is this just my anxiety talking and the existing allocation is likely to perform just fine? Are you doing anything to hedge against high valuations?
Also on a completely separate note, anyone know if MSCI is considering the same exemption to the inclusion to the index of SpaceX/OpenAI/Anthropic as the NASDAQ? Haven't been able to find a clear answer about it.