U.S. stocks rallied Thursday, with the Nasdaq briefly hitting a new intraday high, but index mutual fund pioneer Jack Bogle warned that investors should expect a lower return on equities than they've seen in recent years.
It comes down to the math, he said in an interview with CNBC's "Power Lunch."
For one, dividend yields have seen a 2.5 percent "dead weight loss" from historical returns, he noted.
Plus, "earnings growth has been good, maybe 8 percent on average and stronger than that in recent years, but that's not sustainable in a competitive capitalistic world."
Bogle, who founded The Vanguard Group in 1974 and launched the first retail index fund a couple of years later, thinks the return on stocks this year will be in the 5 to 6 percent nominal area.
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On Thursday, the Nasdaq briefly gained more than 1 percent, topping its all-time intraday high of 5,132.52 from March 10, 2000.
Bogle said he would take the markets' record highs in stride.
"Sooner or later the markets depend … on the intrinsic value of stocks—earnings and dividends," he said. "All these machinations above and below that intrinsic value, I pretty much try and ignore."
He also thinks people may be spending too much time worrying about when the Federal Reserve is going to raise interest rates.
While the most recent statement from the central bank made it clear that rates are going to stay low, Bogle said he'd "still be kind of wary of long-term bonds and stick to the shorter and the intermediates."
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—CNBC's Evelyn Cheng contributed to this report.