Unlocking Wealth: Why Alternative Investments Could Be Your Best Bet

Your Guide to Long-Term Capital Market Expectations

Investing is a complex journey, full of risks and rewards. That’s why we encourage our clients to blend intuition with strategic, data-driven methods when making allocation decisions. Keep in mind that the insights shared here are grounded in qualitative analysis. It’s essential not to rely solely on this information. We’re not recommending any specific asset class or strategy, nor can we guarantee future performance. The assumptions made are passive in nature and do not factor in the influence of active management. Future returns are not promises; they’re simply hypothetical projections, and actual portfolio outcomes may differ significantly. The insights provided are intended to illustrate trends, and should not be viewed as direct investment advice. Remember, forecasts are informed by current market conditions and can change rapidly.

The concept of “expected” or “alpha” returns is inherently uncertain and can be skewed by fluctuations in historical data. So, while these estimates offer a glimpse into potential asset class returns, actual outcomes can vary widely, often higher or lower than anticipated. When evaluating investment strategies or asset classes, keep in mind that these aren’t guarantees of what your portfolio will achieve. Relying solely on models can be misleading as they can’t fully account for the multitude of economic or market factors that influence the real-world management of your investments. Unlike actual results, model outputs don’t reflect trading realities, liquidity issues, or the impact of taxes and fees. Active management may yield different results due to various risk factors outside of a manager’s control.

The opinions and strategies expressed here should not be considered as direct guidance for buying or selling investments in any specific market. We are not making any commitments regarding transactions mentioned herein. All forecasts, figures, and strategies are provided as informational tools, based on specific assumptions and current market realities, and are subject to change without notice. Ensure that you conduct your own thorough research and consult with your financial professionals to assess the implications of any investment on your personal financial goals. Be aware that investing comes with risks—the value of your investments can fluctuate, and you may not recover your initial investment. Past performance is not indicative of future results.

General & Macro Insights

Diving into alternative investments can be enticing, but it also comes with heightened risks compared to traditional options. Such investments are generally not suitable for everyone and should not be seen as a comprehensive investment strategy. They often lack tax efficiency, and it’s wise to engage with your tax advisor before proceeding. Additionally, alternative investments can carry higher fees and may involve leverage and speculative tactics, amplifying both potential gains and losses. The value of these investments can fluctuate considerably, meaning you could end up with less than your original investment.

Real Estate, Hedge Funds, and Private Investments

Investments in real estate, hedge funds, and other private ventures aren’t one-size-fits-all; they come with significant risks and may not yield returns that match your original outlay. Keep in mind that private investments are typically offered via detailed offering memoranda, which outline the inherent risks. There’s no guarantee that an investment’s stated objectives will be achieved. Hedge funds often employ leveraged and speculative strategies, increasing the potential for loss and can be illiquid—lacking regular pricing updates and complex tax implications. They aren’t bound by the same regulatory requirements as mutual funds and often come with elevated fees. Conflicts of interest may arise within the management and operation of these funds.

Key Risks

Engaging with alternative assets carries risks greater than traditional investments, making them suitable primarily for savvy investors. These investments should not be considered a comprehensive approach to investing. They are typically less tax-efficient, and fees can be steep, often coupled with speculative techniques that heighten the stakes for both potential losses and gains. The value of your investment could decrease as well as increase, and you might recoup less than you initially put in. Diversification and asset allocation strategies cannot guarantee profits or prevent losses.

Private investments come with their own unique risks, requiring individuals to meet specific criteria before investing. The insights provided here do not constitute an offer or solicitation to buy or sell any financial instruments. Remember that hedge funds and private equity funds often use leverage and speculative methods that can elevate the risk of loss. They can be illiquid, lack periodic valuations, and involve complex tax situations.

Investments in Real Estate Investment Trusts (REITs) can also pose significant market risks due to their concentration in specific industries or geographic areas. Factors such as fluctuations in property values and broader economic conditions can impact these investments.

This material is designed for informational purposes and may highlight various products and services from private banking sectors. Changes to fees, charges, and interest rates can occur based on applicable agreements and can differ across locations. Not all services are available in every region. If you require assistance accessing this material due to a disability, please reach out to your representative for support. Be sure to review all Important Information.

General Risks & Considerations

The strategies, products, and views detailed in this material may not be suitable for everyone and encompass inherent risks. Investors should be prepared for the possibility of receiving less than their original investment, and historical performance does not guarantee future outcomes. Asset allocation and diversification do not ensure profit or safeguard against losses. Careful consideration should be given to whether the services, products, or strategies discussed align with your individual needs. Assess the associated objectives, risks, fees, and other expenses before making any investment decision. For further guidance tailored to your situation, consult your financial team.

Non-Reliance

While we strive for accuracy, JPM does not guarantee the completeness or reliability of the information provided. We accept no responsibility for losses arising from the use of any part of this material. The data, graphs, and examples included are meant for illustrative purposes only. Our views and strategies are based on current market conditions and may change without warning. We are under no obligation to update this information. Any forecasts made are hypothetical and may differ from actual results.

This document does not establish any duty of care or advisory relationship with you or any third party. It should not be interpreted as an offer, solicitation, or advice—financial, legal, tax, or otherwise—by JPM and its affiliates. Always consult your own advisors before entering into financial transactions.

IMPORTANT CONSIDERATIONS ABOUT Your investments and potential conflicts of interest

Conflicts of interest may arise when J.P. Morgan or its affiliates possess actual or perceived incentives that could affect their management of client portfolios. For instance, conflicts may occur if J.P. Morgan invests in products managed by itself or receives payment for related services. Conflicts may also arise from relationships with other clients or when acting on behalf of its own interests.

We select investment strategies from both J.P. Morgan and third-party managers, carefully reviewed by our research teams. From these, our portfolio construction teams identify strategies that align with our asset allocation goals and investment objectives.

Generally, we prefer J.P. Morgan-managed strategies, especially in areas like cash and high-quality fixed income—up to 100 percent, depending on legal and account-specific factors.

While our in-house strategies align well with our forward-looking views, it’s crucial to recognize that J.P. Morgan benefits from higher overall fees when these strategies are included. Clients have the option to exclude J.P. Morgan-managed strategies (except cash and liquidity products) in specific portfolios.

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