Interview with JPMorgan Portfolio Manager Jordan Stewart\nInflation Holds Downward Market\nStocks, Bonds, Alternatives 4-3-3 Proposed\n\nDovetist Fed Chairman Appoints\n Trump Looking at the Mid-term Election\nState Stock Market Decreases Next Year\n\nFourth Basis for Restoration of Won Values
“Prices could surge between 2026 and 2027. “We need to respond with a ’60/40 Plus (+)’ portfolio that has increased alternative investment.”
Jordan Stewart, portfolio manager at JPMorgan Asset Management, recently met with Mail Business and predicted that the “60/40+” portfolio will outperform the traditional “60/40” portfolio over the next 15 years. Manager Stuart advises the allocation of assets to customers of institutions in the Asia-Pacific region at JPMorgan Multi-Asset Solutions Headquarters.
The 60/40+ portfolio is a portfolio consisting of 60% (30% each) of bonds and alternative assets and 40% of stocks. It can also be seen as a portfolio of ‘4-3-3 (stock, bond, and alternative assets). If the 60/40 portfolio, which was considered the norm, invested only in stocks (60%) and bonds (40%), 60/40+ lowered the share of stocks and bonds and raised the share of alternative assets.
The alternative assets of the 60/40+ portfolio are divided into real estate (25%), real assets such as raw materials (25%), private equity (25%), private equity (15%), and hedge funds (10%).
Regarding the reason for increasing the proportion of alternative investments, he explained, “It is to incorporate defensive assets in case inflation volatility increases.” “There are many factors that will cause an inflation spike next year, such as the impact of tariffs and a lack of supply in the U.S. labor market,” he added. “As in the case of 2022, stocks and bonds will show a positive correlation, which will reduce the diversification effect of the 60/40 portfolio.”
JPMorgan’s Long-Term Capital Markets assumption (LTCMA) predicts that its globally decentralized 60/40+ portfolio could yield an average annual return of 6.9% (in dollars) over the next 10 to 15 years. This is higher than 6.4% of the 60/40 portfolio of stocks and bonds. Not only is the rate of return high, but the volatility is also greatly reduced.
“There will be designated navigation and political volatility next year, but there will be no such situation as Liberation Day (April 2) this year,” manager Stewart said. “It is important for investors to have a diversified portfolio and continue to invest.”
In particular, it is analyzed that the “big event” scheduled for next year is a good thing for the capital market as a whole. The chairman of the Federal Reserve (Fed), who will be newly appointed early next year, will implement an easing monetary policy, and U.S. President Donald Trump, ahead of the midterm elections, predicted that he will improve the labor market.
However, it was analyzed that the debt ratio of major countries is too high and the K-shaped income inequality is deepening as a risk factor to keep an eye on.
As a rebalancing idea at the end of the year, it was evaluated as a good idea to realize some profits from relatively overvalued assets and to sell undervalued assets.
Next year, S&P 493 (the rest of the S&P 500 minus Magnificent 7) is expected to spread from the U.S. market to the non-U.S. market. However, the U.S. stock market, led by artificial intelligence (AI), is still considered a key investment asset as it is showing high sales growth.
Stewart also left some advice for Korean investors.
Regarding the recent weak won, Korean investors are buying large amounts of dollar assets, he pointed out that it is necessary to “balance it.”
He said, “Over the next 15 years, the won’s value will rise by 2% annually.” Foreign direct investment related to memory semiconductors, the National Pension Service’s increased share of Korean stocks, Korea’s inclusion in the World Government Bond Index (WGBI), and the Japanese government’s efforts to appreciate the yen.
As for investors who take high risks such as leverage, he said, “We should start dispersing at least some of our assets,” adding, “If you made money from a leveraged exchange-traded fund (ETF) this year, you should move your money to a longer-term investment destination.”
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