What is essential?
Anton Pil, Global Head of Alternatives
“Essential” may not have been chosen as Merriam-Webster’s 2020 Word of the Year, but it might have been. It was, after all, the year when we came to appreciate anew our essential workers, particularly our heroic frontline health professionals.
The year also led many of us to reflect on what was most essential in our own lives – family, health, home, friends and, of course, a good internet connection.
As investors, we saw that disciplined risk-taking was essential to success in 2020 as markets rewarded those with the confidence to lean in while the world was pulling back. Our own conviction to act on a range of market dislocations stemmed from our more than 50 years of alternatives investment experience and the unique cross-alternative asset class insights that we continually share. Lessons learned in 2008 and 2009, for example, convinced us that swift central bank action and fiscal stimulus would jump-start a V-shaped recovery. At the same time, real-time data exchange from our 14 investment engines and thousands of individual investments pointed to underlying consumer strength and resilient fundamentals.
So where does that leave us for 2021? What is essential in the year ahead? Alternatives, perhaps once considered optional in investors’ portfolios, have indeed become essential. Facing stretched valuations in traditional markets, limited correlation benefits between fixed income and equities, and persistently low bond yields with asymmetric risk, investors have made a decided turn to alternatives in the pursuit of alpha, income and diversification.
To guide our clients in these pursuits, in our 2021 Global Alternatives Outlook, we challenged our diverse group of CEOs, CIOs and strategists from our USD 150 billion alternatives platform to provide a 12- to 18-month outlook for their respective markets and explore their most promising investment ideas over that time horizon.
We hope you find it helpful, if not essential, in navigating 2021. Please let us know if we can be of help in implementing any ideas presented or if you need additional information from any of our contributors.
On behalf of J.P. Morgan Asset Management, thank you for your continued trust and confidence.