Russell 2000 Forward P/E vs. Subsequent 10-Year Annualized Returns

Should long-term investors increase their allocation to U.S. small-cap stocks, given the potential for 9% annualized ten-year returns suggested by the absolute forward P/E for the Russell 2000?

Image: BofA US Equity & Quant Strategy

Russell 2000 Forward P/E vs. Subsequent 10-Year Annualized Returns