JPMorgan Recommends Alternative Investment Strategies In Post-Pandemic Era

JPMorgan Chase & Co’s (NYSE: JPM) asset management division highlighted the need for investors to explore positions in non-traditional assets in its 2021 Long-Term Capital Market Assumptions report. Alternative assets cannot replace traditional assets but have a much more integral role in the post-pandemic era. Kerry Craig, a global market strategist at JPMorgan Asset, told Bloomberg.

What Happened: The investment bank believes the traditional 60/40 investment strategy (60% stocks and 40% bonds) would no longer hold the same relevance as in the past, primarily due to low-interest rates and lesser options to diversify the portfolio.

At this juncture, non-traditional investments like private equity, real estate, infrastructure, and alternative credit could fill the void. Short selling and hedging could replace conventional trading strategies over the next decade and a half.

Labeling alternative investments as essential asset classes, the bank, in its annual report, claimed that these assets could act as a cushion for inflation, provide a stable source of income, and boost portfolio returns.

Why Does It Matter: “The returns from traditional asset classes have just become more and more challenged over time,” Craig said.

A highly flexible monetary policy coupled with the stimulus to restart the economic engine is driving up equity valuations, while bonds worth $17 trillion are trading at a negative yield, as per Bloomberg. It raises concerns over the efficacy of traditional investment strategies.

Price Action: JPM shares are trading higher by 1.82% at $120.01 in the pre-market session on the last check Tuesday.

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