- A balanced portfolio with a 30% alternatives allocation can increase returns up to 7.5%, and boost Sharpe ratios by 21% when compared with a simple 60/40 approach.
- Higher real yields drive global aggregate bond forecasts to 5.3%, the highest in two decades.
- Resilient profits increase U.S. large cap equity forecasts by 80bps, leading to developed markets return forecasts overtaking emerging markets.
NEW YORK, NY, October 19, 2026 — J.P. Morgan Asset Management today released its 2027 Long-Term Capital Market Assumptions (LTCMAs), providing a comprehensive 10-15-year outlook for returns and risks across asset classes as inflation uncertainty and market volatility remain elevated.
In this 31st edition of the LTCMAs, the forecast annual return for a USD 60/40 stock-bond portfolio over the next 10–15 years rises to 7.0%, but higher stock-bond correlations demand further diversification. While labor and demographic constraints weigh on long‑term growth, the report sees broader AI investment and adoption across industries providing a near-term boost to profits and increasing productivity over the long-term. The report highlights opportunities to diversify by spreading equity exposure across regions and alternatives, particularly hedge funds and real assets For investors embracing a 60/40+ portfolio, with 30% in diversified alternatives, the projected return increases to 7.5% and the Sharpe ratio gets a 21% lift over the simple 60/40 approach.
“Our Long-Term Capital Market Assumptions help investors navigate markets reshaped by economic nationalism, accelerating technology, and the rewiring of capital flows” said John Bilton, Global Head of Strategic Research for Multi-Asset Solutions, J.P. Morgan Asset Management. “This year’s outlook sees stronger long-term growth and renewed opportunities to build resilient portfolios through diversification, combining higher global bond yields with alternatives and real assets for differentiated returns and inflation resilience.”
“The global economy is entering a powerful investment cycle, with AI adoption and rising productivity supporting a stronger growth outlook,” said David Kelly, Chief Global Strategist, J.P. Morgan Asset Management. “At the same time, demographic headwinds, large government deficits, and a more complex geopolitical backdrop suggest inflation will remain more volatile over our forecast horizon.”
"Every year the LTCMAs give us the foundation for building client portfolios, and this year that has never mattered more. Return matters, but it is no longer the whole story,” said Grace Peters, Global Co-Head of Investment Strategy for J.P. Morgan Private Bank. “In today's environment, optimizing risk and return together is the imperative, and with dispersion wider than it has been in years, investors anchored to a disciplined strategic asset allocation will find this a more compelling environment than the headlines suggest."
Key takeaways include:
- Three forces shape the future and drive returns. Economic nationalism boosts domestic investment but risks a crosscurrent of inflation volatility. Technology adoption supports the global economy by boosting investment and productivity. Rising domestic investment drives capital rewiring, resulting in shifts in public and private capital flows.
- The best developed world growth outlook in 15 years. The report indicates a global investment surge, centered on AI and extending to 2040, boosts total factor productivity by 50%, to 120bps, pushing the U.S. real GDP growth forecast up to 2.1% and developed world nominal growth up to 4.2%. The mix of GDP-to-inflation is the most favorable since the pandemic.
- U.S. equity upgrades, a global bond renewal, and a first look at bitcoin. The report highlights profit margins of over 15% push the U.S. large cap equity forecast up 80bps to 7.5%, leading to developed market equity projections overtaking emerging markets for the first time in the publication’s history. Higher real yields drive global aggregate bond forecasts from a low of 2.1% in 2021 to 5.3% today, the highest in two decades. A range on bitcoin return is introduced, but bitcoin is not included as an allocation.
- Alternatives for return enhancement, diversification and inflation resilience. Higher inflation volatility, ongoing risk of currency debasement and growing opportunities to capture active alpha reinforce the role of alternatives as essential portfolio diversifiers and drivers of return. The report upgrades diversified hedge funds by 140bps based on sustained alpha trends and higher rates, and maintains resilient return expectations for real assets given ongoing inflation volatility.
The report also outlines the following asset class return assumptions:
- Fixed Income
- U.S. intermediate Treasuries are expected to return 4.6%, as higher cash rate assumptions and rebuilt term premia lift long-term returns.
- U.S. investment grade credit is forecast to return 6.1%, reflecting an increase driven mainly by higher baseline interest rates and increased investment-grade bond issuance from hyperscalers.
- U.S. high yield credit is expected to return 6.7%, increasing from 6.1%, with a fair value spread of 440bps, driven by improved index quality.
- Equities
- U.S. large cap equities are expected to return 7.5%, increasing from 6.7%, reflecting ongoing technology adoption and productivity gains, while elevated starting valuations and concentration risk remain key considerations. The U.S. looks well positioned to lead AI adoption.
- Global equities are projected to return 7.5% (USD), increasing from 7.0%, with non-U.S. markets offering more diversification and benefiting from continued, but slower, U.S. dollar depreciation.
- Emerging markets equities are expected to return 7.1% (USD), lower than last year as recent AI and capex tailwinds normalize.
- Alternatives
- Private Equity: The return assumption for private equity is 9.8%, reflecting a slight decrease with return potential tied to repeatable value creation and identifying operational efficiencies, including the use of AI across portfolio companies.
- Real Estate: U.S. core real estate is expected to return 8.1%, a slight decrease against a backdrop of higher rates. European core real estate is forecast to return 7.1%, an increase from 6.9% last year.
- Infrastructure: Global core infrastructure is projected to return 7.1%, an increase from 6.5% last year, reflecting the supply-chain rerouting as manufacturing reshoring is expected to boost industrial production and benefit transportation assets.
- Commodities: The return assumption for broad basket commodities increases to 4.8%, with access to critical minerals remaining tight and geopolitical risks influencing the outlook. Gold remains unchanged with a return of 5.5%.
- Timberland: Global timberland is expected to return 6.2%, reflecting a slight decrease from last year at 6.3%.
- Hedge Funds: Diversified hedge funds is projected to return 6.7%, an increase from 5.3% last year, reflecting higher alpha estimates.
The LTCMAs are the result of a rigorous research process that combines quantitative and qualitative inputs from over 90 industry-leading portfolio managers, economists and research analysts worldwide. These time-tested projections cover more than 200 assets in more than 20 base currencies, setting the standard for strategic asset allocation and long-term investment planning in today’s changing financial landscape.
View the full 2027 Long-Term Capital Market Assumptions here.
About J.P. Morgan Asset Management
J.P. Morgan Asset Management, with assets under management of $4.8 trillion (as of 9/30/2026), 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, visit: www.jpmorgan.com/am.
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 $3.9 trillion in client assets globally (as of 9/30/2026). More information about J.P. Morgan Private Bank is available at privatebank.jpmorgan.com.
About JPMorgan Chase & Co.
JPMorgan Chase & Co. (NYSE: JPM) is a leading financial services firm based in the United States of America (“U.S.”), with operations worldwide. JPMorganChase had $5.1 trillion in assets and $372 billion in stockholders’ equity as of September 30, 2026. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing and asset management. Under the J.P. Morgan and Chase brands, the Firm serves millions of customers in the U.S., and many of the world’s most prominent corporate, institutional and government clients globally. Information about JPMorgan Chase & Co. is available at www.jpmorganchase.com.
J.P. Morgan Asset Management Long-Term Capital Market Assumptions: These assumptions are for informational and illustrative purposes only and reflect qualitative analysis and judgment; clients should not rely solely on quantitative optimization. They are not investment advice or a recommendation to buy or sell any security, asset class, or strategy, nor a promise, estimate, or guarantee of future performance. Assumptions are passive (do not reflect active management) and are scenario-dependent; actual results may differ materially and may change without notice. Model outputs have significant limitations and do not reflect real-world factors such as trading, liquidity constraints, fees, expenses, taxes, or other implementation/management considerations. This material is not accounting, legal, or tax advice; investors should evaluate relevant legal, regulatory, tax, credit, and accounting implications with their own professional advisors and obtain all relevant information before investing. Investments involve risk; values and income can fluctuate, and investors may not recover their full investment. Past performance and yield are not reliable indicators of future results.