Investors braced for lower returns, study shows

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

The firm’s latest Family Finance Tracker indicated that three quarters (75 per cent) of investors expect total returns of less than 50 per cent over the next five years.

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

Scottish Friendly said its data also shows that investment expectations are varied, however. One in four (25 per cent) investors expect to generate total returns of 50 per cent or more over the next five years, while 24 per cent are expecting returns of between 20 and 49 per cent.

A further 16 per cent said they expect gains of 15-19 per cent, 13 per cent of investors are expecting 10-14 per cent, while 16 per cent forecast returns of less than 10 per cent in total over the next five years.

Scottish Friendly noted that its findings come amid growing concerns about the impact of elevated market valuations and heightened geopolitical tensions on future returns.

“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,” savings expert at Scottish Friendly, Kevin Brown, commented.

“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.”

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