Download Is This The Road To Normalisation?

JPMorgan Funds (Asia) Limited
21st Floor, Chater House
8 Connaught Road Central
Hong Kong
IMMEDIATE RELEASE
IS THIS THE ROAD TO NORMALISATION?
Launching: 2015 market assumptions by J.P. Morgan Asset Management
Hong Kong, 5 November, 2014: The 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 J.P. 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 J.P. Morgan Asset
Management’s Global Multi Asset Group*, and one of the leading authors of the paper,
said, “It has been six years since the end of the great recession and we are certainly on the road
to normalisation. In general, due to continued headwinds, we believe that diversification across
geographies and asset classes will be rewarded in the longer term.”
He went on, “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 normalisation process.”
The Assumptions put forward different considerations and opportunities for investors with
different objectives, for example:
•
Opportunities for investors in search of diversification:
o Use diversified hedge funds as fixed income substitute
o Invest in commodities for their diversification benefit
o Add duration in non-US government bond markets where central banks are easing
JPMorgan Funds (Asia) Limited
21st Floor, Chater House
8 Connaught Road Central
Hong Kong
IMMEDIATE RELEASE
•
Opportunities for investors in search of higher potential returns:
o Reconsider the case for emerging markets where valuations are lower and top-line
growth is likely to be higher
o Add direct or indirect leverage while funding rates are low
o Invest in less liquid markets such as value-added real estate and private equity
As well as providing vital information to investment decision makers across all types of investors,
including pension funds, wealth managers, insurance companies and endowments, the
Assumptions also form the investment principles around J.P. Morgan Asset Management’s
multi-asset portfolios, which include defined contribution target date funds, multi-asset income
funds and tailored strategies within the Solutions Group.
- Ends –
*Global Investment Management Solution - Global Multi Asset Group is part of J.P. Morgan Asset Management’s
Solutions Group
Navigating the white paper
Section 1: Thematic articles
• Analyse long-term market trends across asset classes and the global economy
• Understand the research and other aspects of the concepts underlying our Assumptions
• Discuss strategic asset allocation and portfolio construction issues facing long-term
investors
Section II: Rationale articles
• Understand how we arrive at our Assumptions for macroeconomic fundamentals, fixed
income, equity, alternatives, foreign exchange, volatilities and correlations
• Review the key findings of our research and view selected projections
Section III: Long-Term Capital Market Return Assumptions
• Explore our return and volatility projections for approximately 50 asset classes in
USD/EUR/GBP
• Find the cross-asset correlation assumptions for our entire data set
JPMorgan Funds (Asia) Limited
21st Floor, Chater House
8 Connaught Road Central
Hong Kong
IMMEDIATE RELEASE
How to use the numbers
Our Assumptions can be used by clients in a number of ways:
• Develop or review a strategic asset allocation
• Understand the available risk and return trade-offs across asset classes and within asset
classes across regions
• Make new, and review existing, relative value allocation decisions
•
Use the correlation and volatility data to analyse the risk characteristics of a strategic
asset allocation
Examples:
• Investors may want to explore what opportunities exist to diversify their fixed income
allocation ahead of a change in central bank monetary policy.
• After a period of strong returns in US equities, investors may also want to find out what
opportunities may exist in other markets.
• The assumptions can be used as a key input into an asset allocation model or simulation,
such as the MAPS model that is used extensively by the J.P. Morgan Private Bank.
For further information please contact
Daniel Chui, Head of Investor Communications
Florence Chan, Internal & Media Communications
Telephone: (852) 2800 2874
Telephone: (852) 2800 2776
Email: [email protected]
Email: [email protected]
Issued by JPMorgan Funds (Asia) Limited
摩根基金（亞洲）有限公司
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JPMorgan Funds (Asia) Limited
21st Floor, Chater House
8 Connaught Road Central
Hong Kong
IMMEDIATE RELEASE
Notes to Editors
J.P. Morgan Asset Management (“JPMAM”) is the brand name of J.P. Morgan Chase & Co’s asset management companies, including JPMorgan
Funds (Asia) Limited.
J.P. Morgan Asset Management is a global asset management leader providing world-class investment solutions to clients. With about US$1.7
trillion in assets under management (the Asset Management client funds of J.P. Morgan Chase & Co. as at 30 September 2014) and offices in
over 30 countries around the world, J.P. Morgan Asset Management offers global coverage with a strong local market presence, and leadership
positions in most asset classes.
J.P. Morgan Asset Management managed Asia Pacific client assets totalling US$133.5 billion as at 30 September 2014. In Asia Pacific we have
8 offices, including Hong Kong as our regional headquarters, Australia, China, India, Japan, Korea, Singapore and Taiwan. With over 1,700
employees across the region, JPMAM is able to provide a constant link to these markets and to gather first-hand insights and perspective.
Commitment to Hong Kong
JPMAM’s investment management business in Asia has remained headquartered in Hong Kong for more than four decades and today has over
500 employees based in this location. JPMAM is one of the largest local investment managers in Hong Kong with about US$81.5 billion (as at
30 September 2014) of funds managed across the Asia Pacific region.
As part of a major global investment group, we are committed to providing specialist teams with the resources needed to deliver successful
products and performance to our clients. The Hong Kong-based Pacific Regional Group, together with the local presence of the Global Portfolios
Group, Global Multi Asset Group and Global Fixed Income Groups, forms the core of JPMAM’s investment management operations. In addition
to the knowledge and experience of our individual investment professionals, the stability of the team has enabled JPMAM to develop strong
relationships with local clients.