Investors braced for lower returns after strong market run

Investors are braced for more modest returns over the next five years following a strong run for markets in recent years, new research from Scottish Friendly reveals.

The mutual’s latest Family Finance Tracker shows that three-quarters (75%) of investors expect total returns of less than 50% over the next five years.

By comparison, the UK’s largest 100 companies had returned 50.5% and the US’s largest 500 companies 62.9% in total over the previous five years, as of 13 April 2026.

The data shows that expectations however are varied. One in four (25%) investors expect to generate total returns of 50% or more over the next five years, with 24% expecting returns of between 20% and 49%. A further 16% expect gains of 15-19%, 13% expect 10-14%, and 16% forecast returns of less than 10% in total over the next five years.

The findings come amid growing concerns about the impact of elevated market valuations and heightened geopolitical tensions on future returns.

The data show that expectations vary significantly by age, which likely reflects differences in risk appetite, asset allocation, and experience of similar economic conditions in the past.

More than a third (38%) of Gen Z investors (aged 18-24) expect returns of 50% or more over the next five years, compared to 32% of Millennials (25-44), 10% of Gen X (45-60) and just 8% of Baby Boomers (61+).

The data also reveals that older aged investors are most likely to expect lower returns, with 27% of Baby Boomers anticipating total returns of less than 10% in the next five years, compared with 21% of Gen X, 11% of Millennials and 16% of Gen Z.

Kevin Brown, a savings expert at Scottish Friendly, said: “While markets have delivered strong returns over the past five years, our research reveals that investors are clearly expecting more modest gains over the coming five.

“This perhaps reflects a growing perception that the environment ahead may be more challenging, with elevated valuations – particularly in the US – and ongoing geopolitical uncertainty influencing investor sentiment.

“But, if the past few years have shown us anything, it’s that markets can defy expectations even when sentiment is cautious, valuations are high or conditions appear challenging.

“Against that backdrop, investing should be viewed through a long-term lens. Whether returns are more subdued or not over the coming years, the most important thing for investors is to remain invested, and to avoid reacting to short-term market noise.

“Over time, it is this discipline that can helps investors build long-term wealth, with markets historically helping investors grow money ahead of inflation when held over the long term.”