While investor optimism about President Donald Trump's pro-growth agenda has pushed the stock market higher, Vanguard's chief investment officer has a word of caution.
"It may well be that growth could be amazing but the global outlook hasn't changed that dramatically," said Tim Buckley, who oversees $4 trillion in assets.
There are still productivity issues in the U.S., "huge" debt issues in China, and Europe hasn't really addressed Brexit yet, he said in an interview with "Power Lunch" on Friday.
Because of that, he thinks the market has gotten a little ahead of itself and is preparing clients for a lower-return environment in the long term.
"You've got to get everything going right coming out of Washington, and it better happen sooner rather than later so the economy can catch up with the market," Buckley said.
It's not the first time he's warned of the "euphoria" in the market surrounding Trump's promises of tax cuts, infrastructure spending and the possible repatriation of corporate profits.
In January, he told CNBC, "It's easy to speculate about those things, but we don't know policy one around them and what form they'll take, because it really matters the form that that infrastructure spending takes and what happens with those corporate profits that are repatriated."
Meanwhile, it doesn't appear that interest rate hikes are going to dampen the market's mood, he noted.
"We've all been justifying these high P/Es given the historically low rates in the environment," he said. "Now that rates are going up, you'd expect P/Es to be coming down, but that's not quite the case."
However, he thinks bond fund investors should be just fine.
"As long as they stay invested and their time frame is longer than the duration of the fund, they'll be better off," he said.
—CNBC's Gino Siniscalchi contributed to this report.