J.P. Morgan Asset Management raised its long-term return estimate for a portfolio of global stocks and U.S. bonds to 7.0% annually, citing higher starting bond yields and expected productivity gains.
The projection, published Oct. 19 in the firm's 2027 Long-Term Capital Market Assumptions, is up from 6.4% in its previous outlook. It covers a 10- to 15-year period and measures compounded returns in U.S. dollars. The model holds 60% in MSCI ACWI equities and 40% in Bloomberg U.S. Aggregate bonds, with quarterly rebalancing. Its estimates use market conditions as of Sept. 30, 2026.
Higher starting yields support the firm's bond outlook; its growth assumptions also reflect expectations for stronger corporate profits. J.P. Morgan projects a 5.3% annual return for global aggregate bonds, its highest forecast for that category in two decades. It raised its U.S. large-cap equity estimate to 7.5% and puts the emerging-markets equity estimate at 7.1%.
Investment tied to artificial intelligence is another part of the firm's growth case. J.P. Morgan estimates that productivity growth will reach 120 basis points after accounting for that investment, a 50% increase. It also forecasts 2.1% real GDP growth in the United States and 4.2% nominal growth across the Group of Seven economies.
The outlook projects a 7.5% annual return for a separate portfolio that allocates 30% to diversified alternatives. J.P. Morgan warns, however, that more volatile inflation could cause stocks and bonds to move together more often, limiting the protection investors seek from a conventional 60/40 mix.
The firm also identifies a risk beyond portfolio performance: growth could become less durable if workers and lower-income households fall behind capital owners and higher-income households. Its report compares the spread of AI with earlier waves of innovation, when early gains were concentrated before adoption reached more industries.
J.P. Morgan Asset Management is scheduled to discuss the assumptions in a webcast Thursday, Oct. 22, at 11 a.m. ET.
