Uncertainty has remained a central theme in financial markets over the past several years. Surging inflation, rapid interest rate increases, slowing global growth, increased geopolitical risks and elevated stock and bond market volatility have all dramatically shifted the investment landscape, and alternative investments have not been immune, according to J.P. Morgan’s 2024 outlook for the alternative investment landscape.
To compile its outlook and help investors take advantage of market dynamics, J.P. Morgan asked experienced investment leaders from across its $213 billion global alternatives platform to share their 12- to 18-month outlooks on several alternative investment markets. Their insights into the trends, risks and opportunities influencing multi-alternatives strategies, core private infrastructure, private equity and commercial real estate are featured in individual papers within the research.
“The case for investing in alternatives remains as strong as ever,” Anton Pil, global head of alternatives for J.P. Morgan Asset Management, said. “These assets have historically helped investors diversify traditional portfolios by pursuing investment returns largely independent from publicly-traded equity and bond markets, potentially helping to diversify portfolio correlations, lower overall volatility, expand investment income sources, mitigate inflation risk and enhance both absolute and risk-adjusted performance.”
Looking ahead into 2024, the firm expects for there to be growing demand for alternative investments driven by three broad themes:
- Displacement:Much of 2023 featured a slowdown in private market activity, which broadly pressured pricing in many alternative assets. This opened considerable investment value in some segments and could result in a compelling 2024 vintage, especially if the current interest-rate tightening cycle proves to be at or near its peak.
- Democratization:Investment innovation continues to expand access to alternative investments through a growing range of strategies and structures available to a much broader number of investors.
- Diversification: The investment markets of the past few years have shown the limits of relying solely on traditional stocks and bonds to provide adequate portfolio diversification in the current market cycle. Alternative investments can offer solutions to tap into new, dynamic investment opportunities designed to help better balance portfolio risk/return exposures.