J.P. Morgan Releases 2023 Long-Term Capital Market Assumptions, Forecasting Best Long-Term Returns in More than a Decade
NEW YORK, November 8, 2022: J.P. Morgan Asset Management today released its 2023 Long-Term Capital Market Assumptions (LTCMAs), providing a 10-15-year outlook for risks and returns as asset markets today offer the best long-term returns in more than a decade, driven by lower valuations and higher yields.
In the 27th edition of the research, the forecasted annual return for a USD 60/40 stock-bond portfolio over the next 10–15 years leaps from 4.30% last year to 7.20%. While many investors are rightly focused on elevated inflation and other near-term headwinds, inflation is expected to cool over the next couple of years and long-term return projections have shifted meaningfully higher.
“The painful slump in stock and bond markets in 2022 may not yet be over, but over the longer term we see this year’s turmoil creating the most attractive investment opportunities we’ve seen in a decade,” said John Bilton, Head of Global Multi-Asset Strategy, J.P. Morgan Asset Management. “While markets remain challenging in the short-term, for the first time in years, investors have a full portfolio toolkit at their disposal with return forecasts for assets across the risk spectrum once again positive.”
“Despite near-term cyclical challenges, our inflation forecasts move only modestly higher as we see inflation cooling close to central bank targets,” said Dr. David Kelly, Chief Global Strategist, J.P. Morgan Asset Management. “While entry points are more attractive than they were a year ago, they could get even more attractive if the cyclical weakness of 2022 extends into 2023, as seems likely. Accordingly, investors need to consider the timing of their entry point, with an eye to how much drawdown they can tolerate in the short term.”
“Our 2023 Long-Term Capital Market Assumptions project asset classes resuming their traditional roles in portfolios, with equities providing strong capital appreciation, fixed income providing meaningful income and alternatives providing diversifying exposure to unique return streams,” said Monica Issar, Global Head of Wealth Management Multi-Asset and Portfolio Solutions.“These assumptions are an integral component of our approach to building goal-aligned portfolios that help clients reach their intended outcomes.”
This year’s research also features two thematic articles tackling issues top of mind for investors:
Will globalization resume or retreat in the years ahead?
What are the risks and investment opportunities as the global population approaches 10 billion?
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 90 experts across J.P. Morgan Asset and Wealth Management. In their 27th 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 2023 Long-Term Capital Market Assumptions here.
About J.P. Morgan Asset Management
J.P. Morgan Asset Management, with assets under management of USD 2.3 trillion (as of 30 September 2022), 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.
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.
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