Almost two years after the pandemic struck, the global economic recovery is going strong. Still, policy interventions will have a long-lasting impact. Investors need to look further afield to generate asset returns – both geographically and beyond public markets.
00.00: Long – Term Capital Market Assumptions. Time – tested projections to build stronger portfolios.
00.12: Amid today’s challenging investing environment
00.16: Investors and advisers need long – term insights and projections they can trust
00.18: For 26 years, investment professionals have trusted the long-term capital markets assumptions that inform J.P. Morgan’s investment decisions as a tool to build stronger portfolios.
00.29: Our research is drawn from experts across J.P. Morgan Asset Management
00:32 and used by J.P. Morgan professionals
00.36: to inform investment decisions in our Multi – Asset Solutions portfolios
00.39: From key findings to detailed matrices, the LTCMA report gets you straight to the information you need.
00. 45: Executive Summary
00.45: Thematic articles exploring global trends
00.45: Asset class return estimates
00.45: Detailed assumptions matrices
00.51: For an at a glance overview, the executive summary paints the…
00.51...broad picture of asset returns over a 10 -15 year investment horizon.
00.53: Year – on – year shifts
00.55: Thematic trends
00.57: Notable asset return assumptions
1:01: Inflation and growth projections
1:04: Thematic articles provide in-depth insight into the big picture themes shaping long-term global returns.
1.08: What are the choices and trade-offs in ESG investing?
1:13 China’s asset markets: Too big to ignore or too hot to handle?
1:18 Do cryptocurrencies have a role in long-term portfolios?
1:23 The why of alternatives is clear, but where is the guidance on how?
1.27 Asset class return estimates
1:33 Long-term capital market assumptions provide return and volatility estimates to support portfolio investment decisions across markets and asset classes.
1:35 Currency
1:36 Fixed Income
1:37 Equities
1:38 Alternative Strategies
1:39 Volatility & Correlation
1:42 Detailed assumptions matrices
1:46 And assumptions matrices support strategic asset allocation through carefully calibrated estimates in multiple currencies.
2:00 By sharing our best thinking on the forces and assumptions driving long-term assets, LTCMA empowers you to look ahead with confidence.
2:00 The LTCMA report is a key component of our wider Portfolio Insights program.
2:00 Portfolio Insights Program
2:01 Long Term Capital Market Assumptions
2:02 Quarterly Global Views
2:03 Timely/Topical/Tactical Views
2:04 Portfolio Analytics Service
2:05 Tailored client training
2:07: Our Portfolio Insights helps guide your portfolio decisions through timely commentary, strategic perspectives and in-depth analysis.
2:16 However you choose to use the LTCMA and Portfolio Insights program there is insightful information to help support your investment decisions.
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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. J.P. 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THEMATIC INSIGHTS
Portfolio implications
Expected low returns from a 60/40 portfolio call into question the efficacy of traditional approaches to asset allocation. In particular, the inability of fixed income to provide either compelling returns or diversification suggests that investors need a new architecture for asset allocation.
We recommend a “full spectrum” approach to uncover alternative sources of return. This new architecture embraces a range of mid risk assets, such as real assets, mezzanine debt, hedge funds and hedged equity, along with extension from traditional fixed income and equity into alternatives such as private credit and private equity. In the full spectrum approach, the dominant form of risk shifts from correlation to liquidity and complexity.
"Embracing a full spectrum approach to asset allocation can allow investors to bridge the gap between 60/40 returns and their own return targets and risk limits."
Assumptions
Examine our return projections by major asset class and the thinking behind the numbers.