Multi-Asset Solutions Weekly Strategy Report - J.P. Morgan Asset Management
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Multi-Asset Solutions Weekly Strategy Report

In brief
  • From a portfolio perspective, exposure to tech winners in U.S. equities is not a free lunch. The same growth stories that prompted outsize U.S. equity returns in recent years and a faster recovery from the COVID-19 shock make the U.S. a higher volatility, higher beta market, at least for now.  
  • The shift is a symptom of rising market concentration, which reflects the potentially powerful influences of investor crowding, swings in sentiment and high valuations, along with business fundamentals.
  • We still score U.S. equities as an overweight, and like its tech exposure in combination with cyclical equity markets including emerging markets and Europe.
  • Given the S&P 500’s reduced defensiveness, and the fact that bond yields are pinned down by monetary policy, it has become more difficult to find effective portfolio hedges.
EXHIBIT 1: EQUITY MARKET EXPOSURES TO THE ‘WORKING FROM HOME’ (WFH) THEME

EXHIBIT 2: 1-YEAR ROLLING CORRELATION BETWEEN EM EQUITIES AND USD

Source: Bloomberg, J.P. Morgan Asset Management Multi-Asset Solutions; data through July 2020.

The Weekly Strategy Report (September 14, 2020)

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Please be aware that this material is for information purposes only. Any forecasts, figures, opinions, statements of financial market trends or investment techniques and strategies expressed are, unless otherwise stated, J.P. Morgan Asset Management’s own at the date of this document. They are considered to be reliable at the time of writing, may not necessarily be all-inclusive and are not guaranteed as to accuracy. They may be subject to change without reference or notification to you. JPMorgan Asset Management Marketing Limited accepts no legal responsibility or liability for any matter or opinion expressed in this material.

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