Key Takeaways
- • JPMorgan Asset Management strategist David Lebovitz projects that US equities and fixed income will face persistent headwinds over the next 10–15 years, with expected returns remaining under pressure despite modest positive equity gains.
- • The S&P 500 and Nasdaq have declined 6% and 10.7% year-to-date through March 2022, following three years of exceptional performance (16%+ and 21%+ annual returns from 2019–2021), as inflation concerns, monetary tightening, and geopolitical conflict reshape market dynamics.
- • JPMAM compiled a Q1 2022 guide to six alternative asset classes as a strategic response to anticipated secular headwinds in traditional public markets, positioning alternatives as essential portfolio components for institutional investors.
- • External forecasters including Bank of America's Jill Carey Hall and Stifel's Barry Bannister have warned of a potential "lost decade" for US stocks, with Bannister projecting 0% returns through 2031—a more pessimistic view than JPMAM's own outlook.
- • JPMorgan Asset Management manages approximately $400 billion in alternative assets, placing it among the top 10 managers in the alternatives space and underscoring institutional demand for private markets exposure.
Summary
JPMorgan Asset Management has issued a strategic pivot toward alternative investments as a hedge against anticipated underperformance in US equities and bonds over the coming decade. David Lebovitz, JPMAM's global market strategist, told Insider that "expected returns from equities and fixed income from publicly traded stocks and bonds are going to remain under pressure going forward over the course of the next 10 to 15 years." While Lebovitz projects equity returns will remain positive, the firm's outlook reflects a fundamental reassessment of return expectations for traditional public markets.
The timing of JPMAM's strategic guidance reflects deteriorating conditions in US equities during early 2022. The S&P 500 and Nasdaq 100 have fallen 6% and 10.7% year-to-date, respectively, reversing the extraordinary gains of the 2019–2021 period, when both indexes delivered compound annual returns exceeding 16% and 21%. After adjusting for inflation, 2022 returns have either been cut in half or entirely eliminated, intensifying pressure on institutional portfolios that have become accustomed to equity-driven gains.
Concerns surrounding inflation, Federal Reserve monetary tightening, and Russia's invasion of Ukraine have accelerated this shift. More significantly, external forecasters have published increasingly pessimistic long-term projections. Bank of America strategist Jill Carey Hall warned in November 2021 that US large-cap equities face minimal returns ahead, while Stifel's Barry Bannister has projected 0% annualized returns for US stocks through 2031—a more severe assessment than JPMAM's outlook. Lebovitz has not endorsed these "lost decade" scenarios, but his guidance aligns with consensus that the easy-gain era for passive US equity exposure has ended.
In response, JPMAM released its Q1 2022 Guide to Alternatives, identifying six alternative asset classes positioned to deliver steady cash returns and capital appreciation in an environment of constrained public market yields. The firm's $400 billion in alternative assets under management places it among the top 10 alternatives managers globally, reflecting institutional demand for private equity, private credit, and other non-traditional exposures. This strategic reorientation signals that institutional investors and family offices are expected to materially increase alternative allocations to meet return targets in a structurally lower-return environment for stocks and bonds.
The timing of JPMAM's strategic guidance reflects deteriorating conditions in US equities during early 2022. The S&P 500 and Nasdaq 100 have fallen 6% and 10.7% year-to-date, respectively, reversing the extraordinary gains of the 2019–2021 period, when both indexes delivered compound annual returns exceeding 16% and 21%. After adjusting for inflation, 2022 returns have either been cut in half or entirely eliminated, intensifying pressure on institutional portfolios that have become accustomed to equity-driven gains.
Concerns surrounding inflation, Federal Reserve monetary tightening, and Russia's invasion of Ukraine have accelerated this shift. More significantly, external forecasters have published increasingly pessimistic long-term projections. Bank of America strategist Jill Carey Hall warned in November 2021 that US large-cap equities face minimal returns ahead, while Stifel's Barry Bannister has projected 0% annualized returns for US stocks through 2031—a more severe assessment than JPMAM's outlook. Lebovitz has not endorsed these "lost decade" scenarios, but his guidance aligns with consensus that the easy-gain era for passive US equity exposure has ended.
In response, JPMAM released its Q1 2022 Guide to Alternatives, identifying six alternative asset classes positioned to deliver steady cash returns and capital appreciation in an environment of constrained public market yields. The firm's $400 billion in alternative assets under management places it among the top 10 alternatives managers globally, reflecting institutional demand for private equity, private credit, and other non-traditional exposures. This strategic reorientation signals that institutional investors and family offices are expected to materially increase alternative allocations to meet return targets in a structurally lower-return environment for stocks and bonds.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.