I didn&#x27;t read this McKinsey&#x27;s report but the expectation of lower returns have been around a long time and there are good reasons for it.<p>Most analysis of lower expected returns in long term is not based on recent past or any kind of trend spotting. Its based on looking  how the expected marginal product of capital and growth in economy are expected to change.<p>1. Expected marginal product of capital. For the past 30 years financial depth (the ratio of assets to GDP) has been increasing. There is more capital relative to other factors of production than there was before.<p>2. Economic growth. In most growth models (Solow standard growth model is good enough for this discussion) the most important parameters are capital, labor and technological progress. The amount of labor in industrialized countries is not growing anymore and there is plenty of capital. In the long run, growth is achieved only through technological progress. Only rapidly industrializing countries can expect rapid growth. China is good example how growth will gradually slow down as it catches up with others and  population growth slows down.<p>summary: capital&#x2F;millenial &gt; capital&#x2F;baby-boomer + law supply and demand.