Guide to Alternatives – 1Q 2019

J.P. Morgan Asset Management

Research

41 Pages

J.P. Morgan Asset Management outlines how alternative investments fit into portfolios as traditional returns compress and volatility rises. It breaks down private equity, credit, real assets, and hedge funds while arguing that portfolio construction matters more than individual picks. The more provocative angle is that alternatives are no longer optional, especially as dispersion and dry powder build across markets.

Key Takeaways

Rising Dry Powder Levels: Private equity dry powder reached roughly $1.2 trillion in 2018, signaling increased competition for deals and potential pressure on future returns.
Infrastructure Capital Growth: Global infrastructure fundraising climbed to about $104 billion in 2018, with dry powder nearing $172 billion, reflecting sustained investor demand for stable income assets.
Correlation Diversification Benefits: Core real estate and infrastructure showed correlations as low as -0.2 to equities over long periods, reinforcing their role in reducing overall portfolio volatility.

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