J.P. Morgan Releases 2025 Alternatives Outlook Highlighting Investor Opportunities Amid Global Policy Shifts

Rhea-AI Summary

J.P. Morgan Asset Management has released its seventh annual Global Alternatives Outlook, providing a 12-to-18 month perspective across key alternative asset classes. The report analyzes investment opportunities amid global policy shifts, focusing on private equity, private credit, real estate, infrastructure and transport, hedge funds, and secondaries.

The outlook highlights several key themes: Real estate offers potential inflation protection through rent increases, with U.S. real estate presenting a generational investment opportunity. Infrastructure and transport assets are positioned to benefit from reconfigured supply chains and trade dynamics. Secondaries provide efficient access to private equity and private credit activity, while private equity is expected to benefit from pro-growth policies enhancing corporate profitability. Private credit continues to capture market share, and hedge funds are positioned to navigate policy shifts with opportunities for alpha generation.

Positive

• Real estate sector shows potential for income growth through rent increases
• Infrastructure and transport assets positioned for growth due to trade route changes
• Secondaries offer efficient access to private markets while reducing investment risks
• Private equity environment favorable for dealmaking and exits
• Private credit continuing to gain market share
• Hedge funds positioned for alpha generation in volatile markets

Negative

• High valuations in traditional portfolios present challenges
• Persistent rate volatility affecting investment landscape
• Higher interest rates could pressure lower-quality borrowers
• Concerns over valuations in post-pandemic investments

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Research explores private equity, private credit, real estate, infrastructure and transport, hedge funds, and secondaries

NEW YORK, Jan. 27, 2025 /PRNewswire/ -- J.P. Morgan Asset Management today released its seventh annual Global Alternatives Outlook, providing a 12-to-18 month outlook across key alternative asset classes offering a detailed analysis of the evolving investment landscape shaped by global policy shifts.

The Outlook provides investors with insights into how these changes are expected to impact private equity, private credit, real estate, infrastructure and transport, hedge funds, and secondaries, offering opportunities for growth, diversification, and inflation protection.

Jed Laskowitz, Global Head of Private Markets and Customized Solutions: "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. 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."

Anton Pil, Global Head of Alternatives Solutions: "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."

Some of the key themes revealed across asset classes in the 2025 Alternatives Outlook include:

Real Estate:

• Growth and Inflation Protection: Pro-growth policies are expected to bolster net operating income growth, with real estate offering potential inflation protection through rent increases and property revenue growth.
• Valuation Opportunities: U.S. real estate presents a generational investment opportunity as valuations appear to be bottoming out, with improving fundamentals.

Infrastructure and Transport:

• Inflation and Trade Dynamics: Infrastructure and transport assets are well-positioned to provide critical inflation protection as we may see reconfigured supply chains and trade agreements evolve.
• Global Transport: Transport assets are expected to benefit from changes in global trade routes and increased demand for domestic logistics.

Secondaries:

• Capital Deployment: Secondaries offer efficient access to private equity and private credit activity, allowing investors to capitalize on growth-oriented companies while mitigating j-curve and blind pool risks. The expansion of alternatives into the private wealth market has also led to a rise in semi-liquid structures, which typically rely on secondaries to source liquidity and invest.

Private Equity:

• Pro-Growth Policies: U.S. tax reform and deregulation are anticipated to enhance corporate profitability, reviving IPOs, M&A, and lending activities. This environment is expected to create favorable conditions for private equity dealmaking and exits.
• Valuation Considerations: Investors should be mindful of valuations, especially for investments initiated in the post-pandemic, low-interest-rate environment.

Private Credit:

• Lending Opportunities: A robust U.S. growth environment and deregulatory agenda are likely to support both public and private lending, with private credit continuing to capture market share.
• Interest Rate Impact: Higher interest rates could pressure lower-quality borrowers, but also create opportunities for distressed and special situations credit strategies.

Hedge Funds:

• Volatility and Alpha Generation: Hedge funds are poised to navigate fiscal and monetary policy shifts, with market volatility offering opportunities for alpha generation, particularly through long/short strategies and macro hedge funds.
• Diversification: Given high correlations in equity and fixed income markets, hedge funds provide compelling diversification benefits and offer uncorrelated sources of retu

To view the full 2025 Alternatives Outlook click here. 

About J.P. Morgan Asset Management

J.P. Morgan Asset Management is a global leader in alternatives, with over 60 years of experience managing alternative investments, including real estate, private equity, private credit, liquid alternative products, infrastructure, transport, hedge funds, and forestry. As of December 31, 2024, J.P. Morgan oversees more than $400 billion in alternative assets.

With $3.6 trillion in assets under management as of December 31, 2024, J.P. Morgan Asset Management serves institutions, retail investors and high net worth individuals in every major market globally. The firm offers comprehensive investment management services in equities, fixed income, alternatives, and liquidity. For more information, visit: www.jpmorgan.com/am

JPMorgan Chase & Co. (NYSE: JPM) is a leading financial services firm based in the United States of America ("U.S."), with operations worldwide. JPMorganChase had $4.0 trillion in assets and $345 billion in stockholders' equity as of December 31, 2024. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing and asset management. Under the J.P. Morgan and Chase brands, the Firm serves millions of customers in the U.S., and many of the world's most prominent corporate, institutional and government clients globally. Information about JPMorgan Chase & Co. is available at www.jpmorganchase.com.

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SOURCE J.P. Morgan Asset Management

FAQ

What are the key investment opportunities highlighted in JPM's 2025 Alternatives Outlook?

The outlook highlights opportunities in real estate for inflation protection, infrastructure and transport benefits from trade changes, secondaries for efficient market access, private equity dealmaking, private credit market share growth, and hedge fund alpha generation.

How does JPM expect real estate investments to perform in 2025?

JPM expects real estate to provide inflation protection through rent increases and property revenue growth, with U.S. real estate presenting a generational investment opportunity as valuations appear to be bottoming out.

What impact will interest rates have on JPM's private credit investments in 2025?

Higher interest rates could pressure lower-quality borrowers but may create opportunities for distressed and special situations credit strategies in private credit markets.

How does JPM view hedge fund opportunities in 2025?

JPM sees hedge funds as well-positioned to navigate fiscal and monetary policy shifts, with market volatility offering opportunities for alpha generation, particularly through long/short strategies and macro hedge funds.

What are the main challenges identified in JPM's 2025 Alternatives Outlook?

The main challenges include high valuations in traditional portfolios, positive stock-bond correlations, persistent rate volatility, and pressure on lower-quality borrowers due to higher interest rates.