What is the outlook for long-term returns? In the view of David M. Lebovitz, Global Market Strategist at JP Morgan, markets offer the best potential long-term returns in more than a decade.
“The combination of higher yields and lower valuations – both of which have materialized in the wake of extreme shifts in the macro landscape this year – now suggest that markets offer the best potential long-term returns in more than a decade.”
“The swift normalization of interest rates this year left bonds once again as a plausible source of income and diversification. Higher risk-free rates have also translated to improved credit return forecasts, with spread assumptions remaining relatively stable.”
“On the equity side, current valuations present an attractive entry point, with public equity returns notably higher across the board. Meanwhile, alternatives still offer alpha, inflation protection, and diversification benefits, but manager selection will be key.”
“With the US Dollar more overvalued than at any time since the 1980s, FX translation will be a significant component of forecast returns.”
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