JP Morgan AM encourages ‘dynamic’ portfolio allocation

Advisers must be 'dynamic' in allocating their portfolios as volatility in the markets will persist over the next few years, according to JP Morgan Asset Management.

"There will be a lot of volatility in the next few years, and you need to try and take advantage of that within your portfolios," said JP Morgan's head of Asia product and distribution strategies within the global FICC group, Robert Stewart, speaking at an adviser briefing in Sydney on 11 May.

"The high-yield [bond] market, for example, will turn over at some point, and you will see a correction in pricing, but that will probably be associated with a US recession.

"That's probably not likely to occur until 2018-19 at the earliest. You have to be dynamic in how you allocate across the markets," he said.

Mr Stewart also questioned whether interest rates would rise in the near future.

"I'm not convinced myself that we're going to see meaningful interest rate rises on a global basis in the near future and maybe not for the next couple of years really," Mr Stewart said.

"I think the US will increase interest rates, but it will be very slow and very gradual."

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