The 28th edition of the LTCMAs
NEW YORK, October 17, 2023: J.P. Morgan Asset Management today released its 2024 Long-Term Capital Market Assumptions (LTCMAs), which are used to underpin investment decisions and conversations with asset and wealth management clients, providing a 10-15-year outlook for risks and returns across asset classes. The research provides actionable insights as investors look to build smarter portfolios in the midst of a transition from disinflation to reflation, and from policy accommodation to higher costs of capital.
In this 28th edition of the LTCMAs, the forecasted annual return for a USD 60/40 stock-bond portfolio over the next 10–15 years remains attractive at 7.0%, however there are clear opportunities to boost this outlook. For instance, simply adding a 25% allocation to alternative assets can boost 60/40 returns by 60 basis points and improve the Sharpe ratio by approximately 12%. The long-term growth outlook has risen slightly, driven by the positive productivity impact of automation and artificial intelligence, while the energy transition and emergence of new technologies have the potential to offer investment opportunities.
“The world is entering a period of significant economic transition in the wake of the global pandemic and heightened geopolitical tension, with far-reaching implications for investors. We are moving away from an environment with persistent disinflation, ultra-easy monetary policy, and fiscal restraint,” said John Bilton, Head of Global Multi-Asset Strategy, J.P. Morgan Asset Management. “This transition requires investors to build robust portfolios to meet these challenges by extending out of cash and benchmarks to harvest better returns, and expanding opportunity sets into alternatives and through greater international exposure to enhance returns and diversification.”
“After raising our inflation forecasts significantly in the past two years, changes in this year’s LTCMAs are more nuanced outside of a few major economies, most notably Europe and Japan,” said Dr. David Kelly, Chief Global Strategist, J.P. Morgan Asset Management. “The outlook for developed market growth has risen slightly, driven by the productivity enhancing impacts of artificial intelligence, while forecasts in emerging markets have dipped slightly due to lower trend growth in China.”
“You’ll often hear investors wish for a crystal ball during unpredictable markets. The LTCMAs provide a roadmap to steer through those moments and support our clients’ long-term investment goals. This year, the findings tell a strong story for clients on the power of diversification in an ever-changing world, answering some of the key questions on everyone’s minds right now,” said Monica Issar, Global Head of J.P. Morgan Wealth Management Multi-Asset and Portfolio Solutions. “The process of building goal-aligned portfolios for our clients is powered by the institutional firepower that the LTCMAs provide – whether they are just starting on their journey or planning for future generations.”
This year’s research also features two thematic articles tackling issues top of mind for investors:
- The state’s role in the economy – How investors can assess the rise of industrial policy
- Expanding the diversification toolkit – A smarter portfolio to mitigate shocks in a less predictable world
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 60 experts across J.P. Morgan Asset and Wealth Management. In their 28th 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 2024 Long-Term Capital Market Assumptions here.
About J.P. Morgan Asset Management
J.P. Morgan Asset Management, with assets under management of USD 2.9 trillion (as of 30 September 2023), 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.
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