It has been common to assess the equity risk premium (the difference between returns on equities and bonds), allowing for all of the capital growth observed in the past. In fact, almost all of the volatility in equity returns stems from capital growth rather than from dividends. The chart below looks at what the risk premia would have been over rolling periods of 15 years if the capital return component had been 50% (“CapGrow_050%”) OR 75% OR 100% of what had been observed.