Chapter Two
Why are real assets crucial in a reflationary environment?
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In a reflationary environment with strong economic growth, real assets tend to outperform. Real estate and infrastructure have historically responded well to inflation, and current supply and demand dynamics are constructive.
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Sueann Yeo, Head of Alternative Investments for Southeast Asia, J.P. Morgan Private Bank
In real estate, residential housing, particularly in the U.S., has been systematically underbuilt since the Global Financial Crisis, with vacancy rates at multi-decade lows. With a surge in property demand driven by COVID effects, a massive population of millennial first-time buyers, a robust cyclical recovery, and manageable interest rates, valuations are likely to remain supported going forward. The story is similar for infrastructure, which is also resilient against inflation. On the supply side, infrastructure is outdated and has been underinvested in the U.S. for decades. The Biden administration is set to change that narrative with a planned infrastructure package that would provide significant tailwinds for GDP and investments levered to infrastructure spending.
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Why are real assets crucial in a reflationary environment?
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Real assets tended to outperform in reflationary environments with strong economic growth.
J.P. Morgan Mid-Year Outlook 2021
Sueann Yeo, Head of Alternative Investments for Southeast Asia, J.P. Morgan Private Bank
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For investment portfolios, adding real assets can provide diversification benefits, as both private real estate and infrastructure have historically had low correlations to traditional equity and fixed income markets.
Adding real assets can provide diversification benefits in a reflationary environment.
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Mid-Year Outlook 2021
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Explore the best ideas from J.P. Morgan's world-class economists, strategists and market thinkers.
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View our report on the Mid-Year outook.
Mid-Year Outlook 2021
Want to know more?
Download the PDF
Download the PDF
Want more?
Explore the best ideas from J.P. Morgan's world-class economists, strategists and market thinkers.
Back to mid-year outlook hub
Watch video
How to position as Fed talks about tapering?
THOMAS KENNEDY
CAMERON CHUI
Watch video
Which sectors should equity investors overweight in a reflationary environment?
Watch video
Forget the bond benchmark – Why you need to consider unconstrained fixed income
ANNE ZHANG
Watch video
Alpha over beta –
Why hedge funds now?
TYEN-NIN TAY
Watch video
Should you own Bitcoin?
adam margolis
DAVID STUBBS
Watch video
What megatrends will boom in a post-COVID world?
Watch video
Why real assets are crucial in a reflationary environment?
sUEANN YEO
Watch video
How should you invest in the second half of 2021?
Alex wolf
BACK to mid-year outlook hub
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