J.P. Morgan Asset Management has officially published the results from its seventh annual Global Alternatives Outlook, which will provide a 12-to-18 month outlook across key alternative asset classes to offer a detailed analysis on how global policy shifts will impact the investment landscape.
According to certain reports, the stated Outlook is expected to generate for investors comprehensive insights across private equity, private credit, real estate, infrastructure and transport, hedge funds, and secondaries, offering opportunities for growth, diversification, and inflation protection.
Beginning from real estate, the industry predicts pro-growth policies to bolster net operating income growth. It will also offer potential inflation protection through rent increases and property revenue growth.
Next up, we have valuation opportunities in play. With valuations bottoming out and improving fundamentals, U.S. real estate presents a generational investment opportunity
Moving on to field of transportation and infrastructure, it will have relevant assets as well-positioned to provide critical inflation protection as we may see reconfigured supply chains and trade agreements evolve. Not just that, transport assets, in particular, are expected to benefit from changes in global trade routes and increased demand for domestic logistics.
“In an environment where traditional portfolios face headwinds such as high valuations, positive stock-bond correlations, and persistent rate volatility, the case for alternatives becomes increasingly compelling. These conditions underscore the importance of diversifying with alternative investments to achieve more resilient portfolio outcomes,” said Anton Pil, Global Head of Alternatives Solutions J.P. Morgan Asset Management.
Then, there is the secondaries space. In case you weren’t aware, secondaries are understood to offer efficient access of private equity and private credit activity, an access which helps investors capitalize on growth-oriented companies while mitigating j-curve and blind pool risks. Keeping that in mind, the expansion of alternatives into the private wealth market has now caused a rise in semi-liquid structures, structures that typically rely on secondaries to source liquidity and invest.
This is followed by a lowdown on private equity, where U.S. tax reform and deregulation are anticipated to enhance corporate profitability, and therefore, revive IPOs, M&A, and lending activities, thus creating favorable conditions for private equity dealmaking and exits.
Having said so, investors across the board are advised to stay mindful of valuations, especially for investments initiated in the post-pandemic, low-interest-rate environment.
Another focal point of J.P. Morgan’s report would be private credit, as a robust U.S. growth environment, along with deregulatory agenda, is likely to support both public and private lending, Out of that, private credit is specifically tipped to capture greater market share moving forward
There is also a thought given to the impact of interest rates. In essence, higher interest can very well pressure lower-quality borrowers. However, at the same time, this can also create opportunities for distressed and special situations credit strategies.
Hold on, we still haven’t covered the report’s take on hedge funds. From an overall standpoint, hedge funds are expected to effectively navigate fiscal and monetary policy shifts. In fact, the stated market volatility would end up offering genuine opportunities for alpha generation, particularly through long/short strategies and macro hedge funds.
Making hedge funds’ case even stronger are high correlations in equity and fixed income markets. You see, against these markets; hedge funds offer much more compelling diversification benefits, while simultaneously delivering uncorrelated sources of return.
“Our 2025 Alternatives Outlook leverages our more than 50-year track record as a private markets investor, and this year’s outlook comes at a time when many types of investors are evaluating their allocations to alternatives. With the US economy in a mid-to-late cycle stage, private markets present potential opportunities for enhanced returns versus public markets, inflation protection, and diversification benefits,” said Jed Laskowitz, Global Head of Private Markets and Customized Solutions at J.P. Morgan Asset Management.
