Key Takeaways
- • JP Morgan Asset Management raised its 10-to-15-year annual return forecast for a US dollar 60/40 stock-bond portfolio to 7.0% from 6.4% in last year's edition.
- • A "60/40+" portfolio with a 30% allocation to diversified alternatives is projected to return 7.5%, with a Sharpe ratio 21% higher than plain 60/40, versus 6.9% and a 25% uplift a year earlier.
- • Diversified hedge funds received the largest upgrade among alternatives, rising 140 basis points to 6.7%, while private equity edges down to 9.8%.
- • Global aggregate bond forecast rises to 5.3%, the highest in two decades, with US high yield at 6.7% and US large cap equities at 7.5%.
- • The 2027 Long-Term Capital Market Assumptions frame the outlook around economic nationalism, technology adoption and capital rewiring, and include a bitcoin return range for the first time without an allocation.
Summary
JP Morgan Asset Management has raised its forecast annual return for a US dollar 60/40 stock-bond portfolio to 7 per cent over the next 10 to 15 years, up from 6.4 per cent in last year's edition, according to a report published by Wealth Briefing on 21 October 2026. The 31st edition of the Long-Term Capital Market Assumptions, drawing on more than 90 portfolio managers, economists and analysts, covers more than 200 assets across over 20 base currencies and underpins strategic asset allocation across the group, including at JP Morgan Private Bank.
The report argues that adding diversified alternatives can improve risk-adjusted returns. For a "60/40+" portfolio allocating 30 per cent to diversified alternatives, the projected return rises to 7.5 per cent, with a Sharpe ratio 21 per cent higher than the plain 60/40. The alternatives basket comprises global real estate, infrastructure, transport, timberland, gold, hedge funds, private equity and venture capital. Grace Peters, global co-head of investment strategy at JP Morgan Private Bank, said that with dispersion wider than it has been in years, disciplined strategic asset allocation offers a more compelling environment than the headlines suggest.
The firm frames its outlook around three forces: economic nationalism, faster technology adoption and the reconfiguration of public and private capital flows. JPMAM expects an AI-centred investment cycle extending to 2040 to raise total factor productivity by 50 per cent, to 120 basis points, lifting its US real GDP growth forecast to 2.1 per cent and developed world nominal growth to 4.2 per cent. It also expects inflation to remain more volatile, citing demographics, large government deficits and geopolitics.
Across asset classes, US large cap equities are forecast to rise 80 basis points to 7.5 per cent, supported by profit margins above 15 per cent, though elevated starting valuations and concentration remain risks. Global equities are projected at 7.5 per cent in dollar terms, up from 7 per cent. Emerging market equities fall to 7.1 per cent, and developed market equities overtake emerging markets for the first time in the report's history. The global aggregate bond forecast rises to 5.3 per cent, the highest in two decades and up from a low of 2.1 per cent in 2021. US intermediate Treasuries are expected to return 4.6 per cent, up from 4 per cent, US investment grade credit is forecast at 6.1 per cent, and US high yield rises to 6.7 per cent from 6.1 per cent.
Among alternatives, diversified hedge funds carry the largest upgrade, up 140 basis points to 6.7 per cent. Global core infrastructure rises to 7.1 per cent from 6.5 per cent, while private equity edges down to 9.8 per cent, US core real estate slips to 8.1 per cent and European core real estate rises to 7.1 per cent from 6.9 per cent. Broad commodities increase to 4.8 per cent, gold is unchanged at 5.5 per cent and timberland dips to 6.2 per cent. The report includes a return range for bitcoin for the first time but does not include it as an allocation.
The report argues that adding diversified alternatives can improve risk-adjusted returns. For a "60/40+" portfolio allocating 30 per cent to diversified alternatives, the projected return rises to 7.5 per cent, with a Sharpe ratio 21 per cent higher than the plain 60/40. The alternatives basket comprises global real estate, infrastructure, transport, timberland, gold, hedge funds, private equity and venture capital. Grace Peters, global co-head of investment strategy at JP Morgan Private Bank, said that with dispersion wider than it has been in years, disciplined strategic asset allocation offers a more compelling environment than the headlines suggest.
The firm frames its outlook around three forces: economic nationalism, faster technology adoption and the reconfiguration of public and private capital flows. JPMAM expects an AI-centred investment cycle extending to 2040 to raise total factor productivity by 50 per cent, to 120 basis points, lifting its US real GDP growth forecast to 2.1 per cent and developed world nominal growth to 4.2 per cent. It also expects inflation to remain more volatile, citing demographics, large government deficits and geopolitics.
Across asset classes, US large cap equities are forecast to rise 80 basis points to 7.5 per cent, supported by profit margins above 15 per cent, though elevated starting valuations and concentration remain risks. Global equities are projected at 7.5 per cent in dollar terms, up from 7 per cent. Emerging market equities fall to 7.1 per cent, and developed market equities overtake emerging markets for the first time in the report's history. The global aggregate bond forecast rises to 5.3 per cent, the highest in two decades and up from a low of 2.1 per cent in 2021. US intermediate Treasuries are expected to return 4.6 per cent, up from 4 per cent, US investment grade credit is forecast at 6.1 per cent, and US high yield rises to 6.7 per cent from 6.1 per cent.
Among alternatives, diversified hedge funds carry the largest upgrade, up 140 basis points to 6.7 per cent. Global core infrastructure rises to 7.1 per cent from 6.5 per cent, while private equity edges down to 9.8 per cent, US core real estate slips to 8.1 per cent and European core real estate rises to 7.1 per cent from 6.9 per cent. Broad commodities increase to 4.8 per cent, gold is unchanged at 5.5 per cent and timberland dips to 6.2 per cent. The report includes a return range for bitcoin for the first time but does not include it as an allocation.
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