Increased market turbulence in the last couple of weeks is driving investors to question if they should be repositioning their investment portfolios, whether the current volatility is a new normal, and what will happen to different asset classes as interest rates start to rise and inflation moves further up the agenda.
Now in its nineteenth year, the newly launched 2015 Long Term Capital Market Return Assumptions by JP Morgan Asset Management aims to help investors answer these burning questions and navigate the increasingly complex investment universe.
David Shairp, Portfolio Manager and Global Strategist in JP Morgan Asset Management’s Global Multi Asset Group, and one of the leading authors of the paper, says: “It has been six years since the end of the great recession and we are certainly on the road to normalization. In general, due to continued head winds, we believe that diversification across geographies and asset classes will be rewarded in the longer term.
“Globally, we see decoupling continuing as the eurozone and Japan actively pursue easier monetary policies and the monetary policy cycle turns in the UK and US. In the US, we believe growth will be constrained compared to prior cycles and that inflation will remain range bound. In addition, long-term nominal return expectations for US treasuries, corporate bonds and equities are more subdued and the implied risk premia arguably offers limited protection against any missteps in the policy normalization process.”
