The Weekly Strategy Report (November 12, 2018)Contributor Multi-Asset Solutions
- Our 2019 Long-Term Capital Market Assumptions estimate for real global GDP growth of 2.5% is unchanged from last year; despite a few country-level adjustments, the secular growth outlook is stable and risks are balanced.
- Expected returns for a U.S. 60/40 portfolio are slightly improved, up from 5.25% to 5.50%. The U.S. stock-bond frontier rotated further in a clockwise direction due to higher expected bond returns.
- Global equity returns are unchanged, but there is some regional divergence, which may offer opportunities for investors. Bond return forecasts improved this year, notably in the U.S., where policy normalization has created a favorable entry point. Alternatives are a relative bright spot, as fee reduction and improved alpha trends lend support.
- In our current tactical asset allocation we remain overweight U.S. large cap equities and have tactically leaned gradually more into Treasuries; improved valuations should help them provide more meaningful protection during a negative growth shock.
EXHIBIT 1: HISTORICAL 25-YEAR AVERAGE RETURNS FOR KEY ASSETS AND THIS YEAR'S ESTIMATES
The JPMorgan Global Growth & Income plc seeks out strong long-term returns by investing in a best ideas, high-conviction portfolio from across the world's stock market. The Company also delivers predictable quarterly income distributions which are set at the beginning of its financial year.
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