In the current market environment, investors should prepare their portfolios for possible inflation and volatility, according to a J.P. Morgan Private Bank executive.
Grace Peters, the bank’s co-head of global investment strategy, says in a new interview with Bloomberg Television that recent equity all-time highs make sense due to the overall surge in capital expenditure (capex).
“And obviously that’s not just associated with the AI buildout. If you look at governments directing capital, companies also following suit. The most recent earnings that we saw the past earnings season saw a 12% increase in capital expenditure beyond AI capex, and I do think that economic value is going to flow to owners of risk.”
Peters notes J.P. Morgan Private Bank remains bullish on equities but believes portfolios should be better prepared “for the full range of outcomes.”
“And so we want income with inflation protection. So, infrastructure, which still feels underowned by the market. We think there’s going to be volatility, so hedge funds, we think, are a really great asset to add. Gold as well.
And yet, when we look at our own client portfolios, around 20% are still in cash or in short-dated securities maturing in less than 12 months. And that’s why we think actually that we want to be in there for the equity bull market that we still see ahead. But we do think that there’s still portfolio resilience that needs to be added to capitalize on some of these trends.”
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