J.P. Morgan Asset Management examines how alternatives can improve portfolio diversification, income, and return potential as traditional stock and bond relationships evolve. Private equity, private credit, real assets, and hedge funds each offer different tradeoffs, while AI investment and rising infrastructure demand are creating new opportunities across private markets.
Guide to Alternatives 3Q 2026
J.P. Morgan Asset Management
David Kelly
Research
81 Pages
Key Takeaways
Diversification benefit: Adding 10% alternatives lifted annualized returns to 7.7% from 7.4% while reducing volatility to 9.4% from 9.8% versus a traditional 60/40 portfolio.
Private equity edge: Global private equity averaged 14% annual returns from 2005 through 2Q26, compared with 10% for global public equities over the same period.
Private credit yields: U.S. direct lending yielded 9.1% in the latest quarter, versus 7.2% for high yield bonds and 4.4% for U.S. Treasuries.
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