J.P. Morgan Boosts Its Long-Term Forecast for How 60/40 Portfolios Will Perform -- Barrons.com

By Kenneth Corbin

The long-term outlook for investors is improving, according to J.P. Morgan Asset Management, which this week published its annual report detailing long-term capital market assumptions. Those include projected annual returns of 7% on traditional 60/40 stock/bond portfolios over the next 10 to 15 years, an increase of 60 basis points from the 6.4% return rate J.P. Morgan forecast a year ago.

J.P. Morgan is cautioning, however, that a mounting correlation between stocks and bonds argues for diversifying portfolios with alternative assets. It is projecting 7.5% annual returns on portfolios that add diversified alternative investments, especially hedge funds and real assets, to the traditional 60/40 construction.

AI benefits. The analysts who produced J.P. Morgan's report predict that the U.S. is well positioned to lead artificial-intelligence adoption and are looking ahead to long-term annual growth of U.S. large-cap equities of 7.5%, up 80 basis points, or 0.8 percentage point, from last year's projection of 6.7%.

That prediction reflects assumptions of continued technology adoption and productivity gains, and the analysts conclude that "the U.S. looks well positioned to lead AI adoption." However, the analysts caution about concentration risk in large-cap equities and note that many of those stocks are already trading at elevated levels and could be vulnerable to outside factors such as geopolitical tensions and energy shortages.

"The global economy is entering a powerful investment cycle, with AI adoption and rising productivity supporting a stronger growth outlook," says David Kelly, chief global strategist at J.P. Morgan Asset Management. "At the same time, demographic headwinds, large government deficits, and a more complex geopolitical backdrop suggest inflation will remain more volatile over our forecast horizon."

Global bets. J.P. Morgan sees opportunity in global equities, projecting long-term growth in that asset class of 7.5%, up from last year's forecast of 7%. Those equities can be a diversification play and also benefit from what J.P. Morgan describes as "continued, but slower, U.S. dollar depreciation."

J.P. Morgan says an AI-driven "global investment surge" is behind the best outlook for global growth the developed world has offered in 15 years. At the same time, analysts say inflation volatility and the continued threat of currency debasement could threaten traditional equity values and argue for more diversified portfolio construction, both as a driver of returns and a hedge against risk.

"Return matters, but it is no longer the whole story," says Grace Peters, global co-head of investment strategy at J.P. Morgan Private Bank. "In today's environment, optimizing risk and return together is the imperative."

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October 22, 2026 14:22 ET (18:22 GMT)