JP Morgan Asset Management’s (JPMAM) multi-asset portfolios reflect a pro-growth outlook and a strong preference for US assets, although the firm continues to seek opportunities to diversify both within the US market and globally.
“We remain overweight equities and credit, broadly neutral on global duration, see increasing opportunities in real estate, and we are underweight the euro,” said Sylvia Sheng, global multi-asset strategist, JPMAM in her first quarter 2025 strategic outlook.
In 2025, JPMAM’s multi-asset team thinks the share of earnings growth coming from the biggest six names versus the other 494 stocks in the S&P 500 will “even out”, as big-6 earnings growth likely moderates from 40% in 2024 to a still-punchy 22% in 2025, while earnings growth for the remaining 494 stocks jumps from 3% to 13%.
“Valuations may appear demanding, but as profit growth extends across the index, we see a strong case for remaining overweight US equities and extending exposure to include mid- and small-caps,” said Sheng (pictured).
Growth supportive policies
JPMAM’s view is supported by four key factors: a series of pro-growth policies extending the business cycle and US economic exceptionalism; manageable impact from tariffs that doesn’t deter the Fed from further rate cuts; broadening out of earnings growth from big tech to mid- and small-cap firms; and resilient private sector balances sheets mitigating risks.
“We are optimistic about the economy and markets – building upon two back-to-back years of solid growth, falling inflation, and rising equity markets,” said Sheng.
She expects President-elect Trump’s economic policies to be broadly positive for the US economy, especially if greater emphasis on deregulation and fiscal boost from extending tax cuts improves corporate confidence, opens up capital markets, and accelerates growth and asset returns.
On the other hand, Sheng warns that an emphasis on immigration and tariff policies, disruption to labour supply or trade could have negative consequences, potentially dampening growth and leading to volatility in asset markets.
Outside the US, Sheng is overweight Japanese equities because JPMAM’s quant models highlight their attractive earnings yield and bottom-up profitability. Hong Kong equities also screen favorably despite China tariff fears. Sheng is underweight European equities given ongoing political instability and weak economic growth.
Among fixed income sectors, Sheng noted that high yield credit spreads have narrowed by over 50 basis points since September, but “with all-in yields at around 7%, credit looks attractive”.
“There may be limited scope for further spread tightening, but given the resilience of corporate balance sheets, low distress ratios, and persistent strong demand for new issues we are comfortable holding credit,” said Sheng.
