A survey by J.P. Morgan Asset Management found that 58 per cent of investors said they would be allocating more to infrastructure in the next 18 months, with a further 42 per cent saying they would be upping their real estate investments.
“We’re seeing Australian clients delving into alternatives across the risk spectrum as they look to strengthen returns, mitigate volatility or generate income,” said Rachel Farrell, CEO of J.P. Morgan Asset Management Australia.
“Given high stock market valuations and low bond yields, alternatives can offer investors an interesting source of both income and alpha, especially for those who are taking a more outcome-oriented approach. Greater diversification into alternatives can also help strengthen portfolio resilience.”
Investors are also now buying up more private credit and allocating to hedge funds as more investors shift away from fixed income – 36 per cent of investors are now planning to decrease their fixed income holdings.
Fast-growing markets, including India, are also attracting capital, with 39 per cent of investors planning on increasing their holdings in that market.
“After a year in which nearly every asset class performed strongly, no one is expecting a repeat in 2020, said Kerry Craig, J.P. Morgan Asset Management global market strategist.
“Investors are cautious and rightly so, however, with the imminent threat of recession receding, riskier assets are likely to mildly outperform in the coming year.”
Investors are now anticipating “inevitable market cycle changes” and taking steps to fortify their portfolios, Mr Craig says.
“Meanwhile, with central banks seemingly united in their commitment to deploying unconventional monetary stimulus tools at their disposal to support growth, they are mindful that the squeeze on income will intensify in a continued low interest rate environment.”
