(August 25, 2011) — Short of making major asset allocation changes, JP Morgan foresees many institutional investors actively taking advantage of lackluster markets to rebalance their portfolios.
“Specifically, we’ve noticed pension clients considering investment changes gravitating primarily to five areas,” JP Morgan asserted in a recent webcast presentation for institutional clients.
Those five areas, JP Morgan revealed, include:
1) High dividend equities strategies. “Institutions in need of reliable income sources are turning to alternative asset classes given the persistently low yield environment with the Federal Reserve keeping interest rates near zero for the next two years,” the firm said in a statement, noting that institutions are pursuing equity income strategies both domestically and with international stocks.
2) Actively managed emerging market equities. According to the firm, strong growth in emerging markets are driving institutional investors to pursue the asset class, seeking a more diversified exposure. “Investors note that while emerging market valuations have risen, they are still not near extreme levels, suggesting it is still a reasonable entry point,” the firm stated.
3) Fast growth innovation. JP Morgan asserts that one way for institutions to deliver returns that will help to meet obligations is through exposure to companies positioned at the nexus of evolving consumer trends, particularly technology.
4) Currency diversification. “As growing world economies like China continue to reduce their reliance on the US dollar, institutional investors are very cognizant of the need to diversify,” the firm asserted.
5) Commodity growth opportunities.
To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742