At Mid-Year, Alternatives Shine in a Volatile Market
The first half of 2025 has been a whirlwind, even for seasoned investors. While U.S. economic and earnings data have shown resilience and deregulation efforts have gained traction, these positive developments are tempered by risks associated with tariff policies, geopolitical uncertainties and disruptions driven by artificial intelligence (AI).
This mid-year check-in on alternatives focuses on our key high-conviction themes for the second half of the year.
Building portfolio resilience
Given the wide range of potential outcomes for global economic growth, inflation and interest rates, we believe portfolio resilience should continue to be a top priority for investors.
Portfolio resilience can be buttressed by adding return streams that tend to be less correlated with those of a traditional 60/40 portfolio; by mitigating downside risk and by capitalizing on the distinctive opportunities presented by volatility.
Leaning into liquidity
Traditional dealmaking activity (IPOs, strategic M&A) has been muted by the rise in economic uncertainty, equity market volatility and still-elevated rates. We do see green shoots for dealmaking activity in 2025, as momentum is building for bank capital reform and lower rates. Private equity managers, eager to clear backlogs and boost investor distributions, may turn to nontraditional exits like secondary markets.
Secular growth potential: AI
We see an opportunity for investors in the next phase of AI, which we believe is a multi-year, secular growth trend backed by innovation. The next phase offers substantial alternative investment opportunities, such as in tech-focused private equity, growth equity and venture capital funds. These funds are supporting AI development seeking to enhance efficiency, innovation, productivity and value creation across industries.
We are focused on opportunities at the intersection of growth and profitability within private equity and buyout funds. We believe AI-enabled enterprise software will drive stronger growth by supporting decision-making, streamlining operations and enhancing productivity.
Investment plays in sports
Sports dealmaking has emerged as a bright spot in an otherwise subdued transactional environment. Sports offers the potential for return streams that are less correlated with public and private debt and equity markets. It also has a track record of strong, consistent growth backed by recurring revenue, a non-cyclical business model and global demand.
Looking forward
Chosen carefully, we believe alternatives have the potential to ride out significant and persistent volatility, helping to bring stability, diversification and resilience to portfolios.
Rick Barragan is the Managing Director,
Los Angeles Market Manager, for
J.P. Morgan Private Bank.
[email protected] | (310) 860-3658
privatebank.jpmorgan.com/los-angeles
Source: “At mid-year, alternatives shine in a volatile market,” by Sitara Sundar, Head of Alternative Investment Strategy & Market Intelligence, July 17, 2025
