Abby Joseph Cohen, the senior U.S. investment strategist at Goldman Sachs Group Inc., said equities will generate better returns than bonds for investors in the medium-to-long term.

“If we were to look just at fair-value estimates over the next year to three, we think that returns that are roughly 8 to 10 percent on the stock market are sensible,” she said in an interview on Bloomberg Surveillance with Tom Keene. “It is sensible as well for a long-term outlook, even though we assume that economic growth will not be as robust as it was in the years immediately prior to the financial crisis.”

The Standard & Poor’s 500 Index has surged 25 percent from its 2011 low in October as economic data beat forecasts and Federal Reserve Chairman Ben  Bernanke said policy makers stand ready to act if more stimulus measures for the U.S. economy are needed.

Since the financial crisis, many companies have repaired their balance sheets, boosting returns for shareholders, said Cohen, who is based in New York.

“The focus has been on margins, ROEs and returning capital to shareholders,” she said, referring to so-called return on equity. “We’ve seen dividends increase, we’ve also seen share repurchases increase.”