J.P. Morgan Asset Management released its 2027 Long-Term Capital Market Assumptions (LTCMAs) on Oct. 19, projecting a 7.0% annual return for a USD 60/40 stock-bond portfolio over the next 10 to 15 years, according to a press release from JPMorgan Chase & Co. (NYSE: JPM).

The 31st edition of the report projects that a portfolio with a 30% allocation to diversified alternatives alongside the traditional 60/40 split could increase returns to 7.5% and improve the Sharpe ratio by 21% compared with a standard 60/40 approach.

Key asset class return forecasts include U.S. large cap equities at 7.5%, up 80 basis points from prior estimates, global equities at 7.5% (USD), and emerging markets equities at 7.1% (USD). Global aggregate bond forecasts rose to 5.3%, which the report describes as the highest level in two decades, driven by higher real yields. U.S. intermediate Treasuries are projected to return 4.6%, U.S. investment grade credit 6.1%, and U.S. high yield credit 6.7%.

Among alternatives, private equity is projected to return 9.8%, U.S. core real estate 8.1%, global core infrastructure 7.1%, diversified hedge funds 6.7%, broad basket commodities 4.8%, and gold 5.5%.

The report also introduces a return range for bitcoin for the first time, though bitcoin is not included as a portfolio allocation.

The report identifies three forces it says will shape returns: economic nationalism, technology adoption, and shifts in capital flows. It projects AI-driven investment through 2040 could boost total factor productivity by 50% to 120 basis points, lifting the U.S. real GDP growth forecast to 2.1% and developed world nominal growth to 4.2%.

"Demographic headwinds, large government deficits, and a more complex geopolitical backdrop suggest inflation will remain more volatile over our forecast horizon," said David Kelly, Chief Global Strategist at J.P. Morgan Asset Management.

The assumptions cover more than 200 assets across more than 20 base currencies and are described by the firm as projections for strategic asset allocation planning purposes only, not as investment advice.