When Vanguard released its capital markets outlook for 2026 and beyond, the message was clear: expectations are more cautious than optimistic.

The firm projects that U.S. equities will deliver annual returns of around 4% to 5% over the next five to ten years. This more muted outlook is largely driven by concerns surrounding large-cap technology stocks, particularly their high valuations and the impact of “creative destruction” — the idea that new competitors could erode profitability across the sector over time.

Given this backdrop, Vanguard sees stronger opportunities in other areas, including value stocks, small-cap companies, as well as international and emerging markets, as investors potentially shift away from heavy exposure to large U.S. tech firms.

This perspective is not unique. Major financial institutions such as Goldman Sachs, Charles Schwab, and JPMorgan Chase have also forecast lower long-term returns for U.S. large-cap stocks. Their estimates range roughly between 3% and 6.7% annually — significantly below the S&P 500’s 12.9% average annual return over the past decade.

If these projections hold, future performance may resemble more moderate periods in market history, such as 2006 to 2015, when the index delivered average returns closer to 5% per year.

This raises an important question: is it still worth investing in ETFs that track the S&P 500, such as the Vanguard S&P 500 ETF (VOO)?

On one hand, these funds remain a cornerstone of long-term investing, offering broad diversification by tracking the 500 largest publicly traded U.S. companies. On the other hand, investors may need to adjust expectations, as the broader market consensus points to more modest returns ahead.

In short, investing in the S&P 500 still makes sense — but with a new reality: slower growth and a greater need for diversification to maximize long-term results.