JPMorgan Chase Highlights Sector That’s Primed To Outperform US Equities Over the Next 10–15 Years, Outlines Diversification Strategy

Bank behemoth JPMorgan Chase is predicting one sector will outperform US stocks in the coming years.

In a new investment strategy note, JPMorgan analysts Andrew VanWazer and William M. Smith say that international stocks may put up a lot more gains than US stocks for at least the next decade.

“JP Morgan asset management’s long-term capital market Assumptions suggest developed international stocks may produce better annual returns than US equities over the next 10 to 15 years. The expected difference is about 1.4% annually – specifically, 8.1% for EAFE stocks (Europe, Australasia, Far East) versus 6.7% for US stocks.

While these numbers aren’t predictions, they’re helpful data points based on assumptions about earnings, valuations, currency shifts and dividends.”

The banking analysts are now recommending a new blend of international stocks with US stocks to better diversify an investment portfolio and manage risk better, such as if the handful of US tech firms responsible for most of the S&P 500’s recent gains stumble.

“Adding just a 30% allocation to non-US developed markets brings more diversification than it did a decade ago, when the US and international split was closer to even…

International diversification is not about betting against the US. It’s about reducing dependence on a single region or group of companies. In times of uncertainty, that kind of balance can help portfolios stay on track.”

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