[...] says Matt Freund, chief investment officer of USAA's mutual funds. He says stocks are likely due to deliver lower returns than before, maybe 7 percent annually, partly because of how high their prices have become relative to corporate profits. [...] as the Federal Reserve gets closer to raising interest rates, Freund expects price swings for stocks to get bigger. Instead of taking on a lot of extra risk for only a little bit more return, the right choice may be to get more conservative, says Freund, who manages several bond mutual funds. How much more volatility should we be expecting once the Fed begins raising rates? Aren't stocks supposed to do well, even after the Fed starts raising rates? Everybody talks about how stocks typically don't peak until two or three years after the Fed begins raising rates. Stock valuations today are not cheap, and they are (based on the assumption that) economic activity will return to normal, will accelerate. People always talk about how you need to buy stocks today because they're a TINA - there is no alternative. [...] that doesn't mean you're being paid for the risk, and that doesn't mean it's appropriate for you and your time horizon. Don't managers of high-yield bond funds always say they like high-yield? If I gave you the choice of two asset classes, and one was going to earn 7 percent and be really volatile, and the other was going to earn almost 7 percent but with a lot less volatility, which one is better?