JP Morgan "60-40 Stock-Bond Investment, 7% Annual Return"

Hanwha Asset Management and JP Morgan Hold Meeting
Hanwha Asset Management "TDF Tops All Retirement Target Dates"

JP Morgan projected that a portfolio investing in stocks and bonds at a 60 to 40 ratio respectively will yield a return of 7% next year.

Jordan Stewart, Executive Director at JP Morgan, is explaining the 60/40 portfolio at Hanwha Headquarters in Yeouido, Seoul on the 9th.
[Photo by Hanwha Asset Management]

On the 9th, Hanwha Asset Management held a press briefing with JP Morgan at its Yeouido headquarters to share next year's outlook, the Long-Term Capital Market Assumptions (LTCMA) forecast, and the performance factors of Hanwha Lifeplus TDF (Target Date Fund). Hanwha Asset Management has maintained a collaborative relationship with JP Morgan in managing TDFs, a representative pension product.

On this day, Jordan Stewart, Executive Director at JP Morgan, and others presented the annual report titled "2024 Long-Term Capital Market Outlook," which forecasts risks and performance over the next 10 to 15 years. LTCMA is a project involving more than 60 experts at JP Morgan and represents an annual research output. It provides forecasts on risk and return across 200 asset classes and 17 currencies, serving as the decision-making foundation for JP Morgan’s multi-asset investment engine.

They stated, "The '60/40 portfolio' is expected to deliver a 7% annual return next year, following this year's performance," adding, "This is slightly lower (by about 20 basis points) than last year but still a good starting point." They also noted, "It is a good time for active allocation," forecasting that "stock returns will be slightly lower this year, bond returns will be somewhat higher, alternative investment returns will be similar to last year, but real asset returns will increase."

Furthermore, they said, "Specifically, investing in a 60/40 portfolio is expected to yield 97% growth over the next 10 years." This figure is higher compared to the 33% expected return from holding only cash, assuming a 2.9% interest rate over 10 years. They also mentioned, "Including about 25% alternative investments in the 60/40 portfolio increases the expected return to 108%."

Byun Jae-il, Head of Hanwha Asset Management’s Pension Solutions Team, said, "This year, Hanwha Lifeplus TDF recorded excellent performance due to the effect of a stable asset allocation strategy despite a volatile market environment," citing the 'global equity portfolio' and 'hybrid currency hedge' strategy as the reasons.

Hanwha Asset Management collaborates with JP Morgan in managing TDFs, achieving robust returns amid domestic and international market changes based on global research by country, sector, and company. A distinctive feature is the differentiated currency strategy applied by asset type. They mainly adopt a currency open strategy for risk assets such as stocks and a currency hedge strategy for safe assets like bonds. As of the end of September this year, Hanwha Asset Management’s TDF products ranked within the top 5 in year-to-date returns across all vintages (retirement target dates). Extending the investment period to the recent 3 years, all vintages ranked within the top 3, demonstrating 'top-tier' performance.

Regarding next year’s market outlook, Team Leader Byun said, "We expect bonds to play an important role in global asset allocation strategies," adding, "The strengthening disinflation trend and the economic slowdown resulting from cumulative global central bank tightening policies are expected to create a favorable market environment for bonds."

Choi Young-jin, Head of Hanwha Asset Management’s Strategic Business Division, stated, "JP Morgan Asset Management invests approximately $321 million (about KRW 425 billion) annually in research, providing global investment options," and added, "Through collaboration with them, we will enhance our vast data acquisition and analytical capabilities and further strengthen the stability of fund management."