JPMorgan Chase touts hedge funds and real estate will outperform equity debt next year And cryptocurrencies are expected to fluctuate and climb

JPMorgan strategist Nikolaos Panigirtzoglou and others pointed out that investors with cash should consider putting them into hedge funds and real estate, as traditional assets such as stocks and bonds are expected to outperform next year.

Strategists write that so-called alternative assets — including private bonds, private equity and digital currencies — " should continue to outperform in 2022." They expect returns of 11 percent for such assets next year, double the expected 5 percent gain in equities and fixed income securities. They also said that cryptocurrencies may rise, but the trend may be very tortuous, so it is difficult to recommend them for core positions.

The proposal is part of the team's first outlook for alternative investments, which the bank estimates at $25 trillion, twice the level of 2014. Admittedly, many of these tools are not readily available and are difficult to exit due to liquidity constraints. JPMorgan believes that while this is not ideal for fund managers with an investment period of one year, their more optimistic outlook suggests that this is an opportunity to improve performance.

"Unlike traditional asset classes, large-scale positioning and exits (in alternative assets) are not so simple," the strategist said in a report released last week, "so it is more suitable for institutional investors who want to allocate new cash flows to alternatives than to those who consider their strategic/long-term allocation to alternatives." ”

Real estate and digital currencies have soared this year, in part because investors are pouring into varieties that are seen as averse to inflation risks.

In the eyes of JPMorgan strategists, hedge funds — especially those that pick assets based on macroeconomic trends — are set to shine because the Fed's curtailment of asset purchases will trigger market volatility and drive down bond prices. At the same time, they see real estate – especially industrial and residential properties – benefiting from the economy's expansion at a higher than trend.

JPMorgan Chase & Co.'s outlook report said that while digital assets are expected to rise 15 percent next year, double the expected returns of hedge funds and will outpace the real estate industry's expected 12.5 percent increase, the sharp volatility of cryptocurrencies has weakened their appeal.

This article originated from the Financial Circle Network