JP Morgan highlights importance of diversified alternatives portfolio in 2025
JP Morgan Asset Management has highlighted the value of a diversified alternatives portfolio as part of its 12- to 18-month outlook across asset classes.
The manager expects private credit to continue to capture the market throughout 2025, with a robust US growth environment and deregulatory agenda likely to support both public and private lending.
Meanwhile, higher interest rates could pressure lower quality borrowers but also create opportunities for distressed and special situations credit strategies.
Secondaries are expected to continue to provide efficient access to private equity and private credit activity, allowing investors to capitalise on growth-oriented companies while mitigating j-curve and blind pool risks.
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The firm said real estate offers potential inflation protection through rent increases and property revenue growth, while infrastructure and transport assets are well-positioned to provide critical inflation protection as we may see reconfigured supply chains and trade agreements evolve.
JP Morgan also highlighted the expansion of alternatives into the private wealth market, which has also led to a rise in semi-liquid structures, which typically rely on secondaries to source liquidity and invest.
The 28-page Global Alternatives Outlook – its seventh to date – pointed to “broad market volatility and decades-high inflation” over the first half of the decade.
The asset manager went onto to say that the above factors meant “limiting portfolio diversification to traditional assets” presented challenges.
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“Fortunately, alternative investments, such as private equity, private core infrastructure and private real estate strategies have become increasingly accessible to individual investors,” the report said.
“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,” said Jed Laskowitz, global head of private markets and customised solutions. “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.”
Global head of alternatives solutions Anton Pil added: “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.”
JP Morgan oversees more than $400bn (£321bn) in alternative assets.
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