According to JP Morgan, over a third of EMEA ultra-high net worth individuals (UHNWIs) believe equities will be the best performing asset class over the next year, despite ongoing market volatility.

Of the 800 respondents to JP Morgan’s Spring Private Client Survey, the sentiment of 39% remains unchanged from the US bank’s equivalent survey in the winter of 2018.

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Added to this, 33% of the UHNW JP Morgan clients surveyed are investing in higher-quality assets to position their portfolios along more defensive lines.

Twenty-four per cent of the respondents are focussing on areas with long-term gain such as healthcare and technology.

One fifth of the clients surveyed are now investing in defensive sectors such as utilities, real estate and telecoms.

JP Morgan equities optimism

“Like many of the UHN clients we surveyed, we’re also mostly positive on equities for 2019, which is reflected in our overweight allocation of equities in managed portfolios,” said Oliver Gregson, head of the UK & Ireland markets for JP Morgan Private Bank.

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“As we enter late cycle investing, we see a movement from cyclical growth sectors to greater exposure to secular growth stories. The technological revolution isn’t slowing down, while the healthcare sector has enjoyed consistently positive earnings growth over the past 20 years.”

The view of JP Morgan and its clients is one that is largely held across the financial services industry, with other banking heavyweights also speaking of the importance of a defensive posture as the present economic cycle shows signs of coming to an end.

While the global economic climate is clouded in uncertainty, most experts still see a recession as unlikely this year.

This highlights the importance of staying invested and avoiding shifting to a purely defensive stance, as Gregson points out.

“As markets increasingly reflect the strains associated with an ageing economic cycle, we are de-risking. We liken this process to calibrating the right mood with dimmers, rather than simply flipping a switch from on to off.

“Within and across asset classes we’ve taken full advantage of the dimmers available to us to ensure that the appropriate level of risk is being taken.

“However, whilst our expectation for growth to slow merits this caution, we believe it is still too soon to shift to a fully defensive posture. That view, along with others, will certainly evolve as 2019 unfolds.”