The investment manager surveyed more than 22,000 investors from across the world.

UK-based investors are expecting annual returns of nearly 9 per cent on their investments over the next five years, according to new data from Schroders.

The global investment manager surveyed more than 22,000 investors globally, including over 1,000 based in the UK, and found that over half (58 per cent) were expecting an average annual return of 8.7 per cent on their investments. 

James Rainbow, co-head of Schroders’ UK intermediary business, said the expectations looked “very optimistic”, and noted that the UK stock market’s “remarkable rally” had likely buoyed confidence levels. 

Millennials, typically defined as those presently aged between 18 and 34, were notably optimistic: nearly half (43 per cent) expected minimums returns of 10 per cent, with almost a quarter (23 per cent) of the cohort having expected returns in excess of 15 per cent.

But are investors expecting too much?

Historically, equities have not generated returns as high as those cited in the study, Schroders pointed out. For example, world stock markets have provided annual returns, with dividend income reinvested, of 7.2 per cent over the past 30 years, as measured by the MSCI World Index. 

Although the survey’s findings highlighted a largely bullish outlook, Schroders found that UK-based investors were averse to taking “too much” risk because of uncertainty triggered by geopolitical events. When asked about the current political climate, just under half (48 per cent) of the group said they were increasing cash holdings. Some 59 per cent said they did not want to take on more risk at the time.