J.P. Morgan Asset and Wealth 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 forecast 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. 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”.John Bilton, Head of Global Multi-Asset Strategy, J.P. Morgan Asset Management.
“Despite near-term cyclical challenges, our inflation forecasts move only modestly higher as we see inflation cooling close to central bank targets. 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”.Vincent Juvyns, global market strategist at J.P. Morgan Asset Management.
“Our 2023 Long Term Capital Markets 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”.Grace Peters, Head of Investment Strategy EMEA at J.P. Morgan Private Bank.