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DUBAI: J.P. Morgan Asset Management today released its 2024 Long-Term Capital Market Assumptions (LTCMAs), which are used to underpin investment decisions and conversations with asset and wealth management clients, providing a 10-15-year outlook for risks and returns across asset classes. The research provides actionable insights as investors look to build smarter portfolios in the midst of a transition from disinflation to reflation, and from policy accommodation to higher costs of capital.
In this 28th edition of the LTCMAs, the forecasted annual return for a USD 60/40 stock-bond portfolio over the next 10–15 years remains attractive at 7.0%, however there are clear opportunities to boost this outlook. For instance, simply adding a 25% allocation to alternative assets can boost 60/40 returns by 60 basis points and improve the Sharpe ratio by approximately 12%. The long-term growth outlook has risen slightly, driven by the positive productivity impact of automation and artificial intelligence, while the energy transition and emergence of new technologies have the potential to offer investment opportunities.
“The world is entering a period of significant economic transition in the wake of the global pandemic and heightened geopolitical tension with far-reaching implications for investors. We are moving away from an environment with persistent disinflation, ultra-easy monetary policy, and fiscal restraint,” said John Bilton, Head of Global Multi-Asset Strategy, J.P. Morgan Asset Management. “This transition requires investors to build robust portfolios to meet these challenges by extending out of cash and benchmarks to harvest better returns, and expanding opportunity sets into alternatives and through greater international exposure to enhance returns and diversification.”
“After raising our inflation forecasts significantly in the past two years, changes in this year’s LTCMAs are more nuanced outside of a few major economies, most notably Europe and Japan,” said Tilmann Galler, Global Market Strategist, J.P. Morgan Asset Management. “The outlook for developed market growth has risen slightly, driven by the productivity enhancing impacts of artificial intelligence, while forecasts in emerging markets have dipped slightly to due to lower trend growth in China.”
“You’ll often hear investors wish for a crystal ball during unpredictable markets. The LTCMAs provide a roadmap to steer through those moments and support our client’s long-term investment goals. This year, the findings tell a strong story for clients on the power of diversification in an ever-changing world, answering some of the key questions on everyone’s mind right now,” said Grace Peters, Global Head of Investment Strategy, J.P. Morgan Private Bank. “The process of building goal-aligned portfolios for our clients is powered by the institutional firepower that the LTCMAs provide – whether they are just starting on their journey or planning for future generations.”
This year’s research also features two thematic articles tackling issues top of mind for investors:
- The state’s role in the economy – How investors can assess the rise of industrial policy
- Expanding the diversification toolkit – A smarter portfolio to mitigate shocks in a less predictable world
The LTCMAs are developed as part of a deep, proprietary research process that draws on quantitative and qualitative inputs as well as insights from a team of more than 60 experts across J.P. Morgan Asset and Wealth Management. In their 28th year, these time-tested projections help build stronger portfolios, guide strategic asset allocations, and establish reasonable expectations for risk and returns over a 10 to 15-year timeframe for more than 200 major asset and strategy classes. These assumptions fuel decision-making in J.P. Morgan's multi-asset investing engine and inform client conversations throughout the year.
View the full 2024 Long-Term Capital Market Assumptions here.
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About J.P. Morgan Asset Management
J.P. Morgan Asset Management, with assets under management of USD 2.9 trillion (as of September 30, 2023), is a global leader in investment management. J.P. Morgan Asset Management's clients include institutions, retail investors and high net worth individuals in every major market throughout the world. J.P. Morgan Asset Management offers global investment management in equities, fixed income, real estate, hedge funds, private equity and liquidity. For more information: www.jpmorganassetmanagement.com.
About J.P. Morgan Private Bank
J.P. Morgan Private Bank provides customized financial advice to help wealthy clients and their families achieve their goals through an elevated experience. Clients of the Private Bank work with dedicated teams of specialists that bring their investments and financial assets together into one comprehensive strategy, leveraging the global resources of J.P. Morgan across planning, investing, lending, banking, philanthropy, family office management, fiduciary services, special advisory services and more. The Private Bank oversees more than $2.2 trillion in client assets globally. More information about J.P. Morgan Private Bank is available at privatebank.jpmorgan.com/.
JPMAM Long-Term Capital Market Assumptions: Given the complex risk-reward trade-offs involved, we advise clients to rely on judgment as well as quantitative optimization approaches in setting strategic allocations. Please note that all information shown is based on qualitative analysis. Exclusive reliance on the above is not advised. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. Note that these asset class and strategy assumptions are passive only – they do not consider the impact of active management. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Assumptions, opinions and estimates are provided for illustrative purposes only. They should not be relied upon as recommendations to buy or sell securities. Forecasts of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material has been prepared for information purposes only and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. The outputs of the assumptions are provided for illustration/discussion purposes only and are subject to significant limitations. “Expected” or “alpha” return estimates are subject to uncertainty and error. For example, changes in the historical data from which it is estimated will result in different implications for asset class returns. Expected returns for each asset class are conditional on an economic scenario; actual returns in the event the scenario comes to pass could be higher or lower, as they have been in the past, so an investor should not expect to achieve returns similar to the outputs shown herein. References to future returns for either asset allocation strategies or asset classes are not promises of actual returns a client portfolio may achieve. Because of the inherent limitations of all models, potential investors should not rely exclusively on the model when making a decision. The model cannot account for the impact that economic, market, and other factors may have on the implementation and ongoing management of an actual investment portfolio. Unlike actual portfolio outcomes, the model outcomes do not reflect actual trading, liquidity constraints, fees, expenses, taxes and other factors that could impact the future returns. The model assumptions are passive only – they do not consider the impact of active management. A manager’s ability to achieve similar outcomes is subject to risk factors over which the manager may have no or limited control. The views contained herein are not to be taken as advice or a recommendation to buy or sell any investment in any jurisdiction, nor is it a commitment from J.P. Morgan Asset Management or any of its subsidiaries to participate in any of the transactions mentioned herein. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit and accounting implications and determine, together with their own financial professional, if any investment mentioned herein is believed to be appropriate to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yield are not a reliable indicator of current and future results.
J.P. Morgan Asset Management is the brand for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide.
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