Exploring opportunities in the 2026 Alternatives landscape

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Text: J.P. Morgan. PLEASE NOTE: This session is closed to the press. Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments involve greater risks than traditional investments and should not be deemed a complete investment program. They are not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain. The value of the investment may fall as well as rise and investors may get back less than they invested. The views and strategies described herein may not be suitable for all clients and are subject to investment risks. Certain opinions, estimates, investment strategies and views expressed in this document constitute our judgment based on current market conditions and are subject to change without notice. This material should not be regarded as research or as a J.P. Morgan research report. The information contained herein should not be relied upon in isolation for the purpose of making an investment decision. More complete information is available, including product profiles, which discuss risks, benefits, liquidity and other matters of interest. For more information on any of the investment ideas and products illustrated herein, please contact your J.P. Morgan representative. Investors may get back less than they invested, and past performance is not a reliable indicator of future results. This information is provided for informational purposes only. We believe the information contained in this video to be reliable; however we do not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage arising out of the use of any information in this video, The views expressed herein are those of the speakers and may differ from those of other J.P. Morgan employees and are subject to change without notice. Nothing in this video is intended to constitute a representation that any product or strategy is suitable for you. Nothing in this document shall be regarded as an offer, solicitation, recommendation or advice (whether financial, accounting, legal, tax or other) given by J.P. Morgan and/or its officers or employees to you. You should consult your independent professional advisors concerning accounting, legal or tax matters. Contact your J.P. Morgan representative for additional information and guidance concerning your personal investment goals. INVESTMENT AND INSURANCE PRODUCTS: NOT A DEPOSIT. NOT F.D.I.C INSURED. NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY. NO BANK GUARANTEE. MAY LOSE VALUE.

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This session is closed to the press.

Welcome to the JPMorgan webcast. This is intended for informational purposes only. Opinions expressed herein are those of the speakers and may differ from those of other JPMorgan employees and affiliates. Historical information and outlooks are not guarantees of future results. Any views and strategies described may not be appropriate for all participants and should not be intended as personal investment, financial, or other advice. As a reminder, investment products are not FDIC-insured, do not have bank guarantee, and they may lose value. The webcast may now begin.

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Gold ink swoops across a black surface, forming letters in cursive.

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Text: J.P. Morgan. There is a long swoop from the N.

Two women sit at a table in a room, papers in front of them on the table. Behind them is a gray acoustic panel on which is text: J.P. Morgan. Nellie Miller, Head of New York, Family Investments and Advice, J..P. Morgan Private Bank.

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Let's get this started. My name is Nelle Miller. And I'm the head of the New York Private Bank. And I am also responsible for investments and advice for our largest clients across the country. And I'm very excited because we are with someone we like to call a JPMorgan celebrity.

Oh, gosh.

This is Kristin Kallergis, who is responsible for and is global head of our alternatives platform. And what we thought we'd do this morning is how we wake up every morning-- is we do a morning meeting. It's 30 minutes every morning, every day. It's at 8:00 AM. So if you want to follow along, we're going to create content for you. So if you want to grab your cup of coffee and start at 8:00 AM, please join us. But we're going to spend the entire time on alternatives.

Great.

And so just to give you a flow of the next 30 minutes, we're going to talk about allocations of alternatives and where that landscape is. We're going to dive into private credit because every day, there's a headline. And then we are going to talk about uncorrelated correlated returns and what that looks like. And then we're going to also talk about where we're really seeing opportunities, especially as you think about equity risk. So we'll talk about that. And then we'll end it on AI because that's also what you read about.

We can't not talk about it, yes.

You cannot. So KK, let's start with the overall allocation of alternatives in people's portfolios and where you're seeing that and how that looks today.

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Kristin Kallergis Rowland, Global Head of Alternative Investments, J.P. Morgan Private Bank.

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Awesome. Good starting point. And I would say it does range based on-- it's typically a larger allocation the larger the balance sheet. So what we see is institutional investors-- if you look at a lot of the publicly available data-- shows that an average institutional investor allocates about 55% across alternatives.

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Slide. Text: Building Resilient Portfolios with Alternatives. An infographic appears titled Investor Asset Allocation. Alternatives Asset Allocation by Investor Type. 55% Institutional Investors. 30% J.P.M. Large Global Families (Family Office Report). 22% Ultra High Net Worth ($30 million plus). 4% High Net Worth Investors ($5 million to $30 million). An arrow points from this infographic to a donut chart titled Private Investment Allocations. Text: A balanced portfolio is anchored in P.E. and diversified across asset classes. The largest share of the donut chart is Private Equity and Secondaries. The other portions are Opportunistic Real Estate and Growth Equity, each at 10 to 20%; Core Real Estate at 5 to 10%; Venture Capital at 0 to 10%; Core Infrastructure at 0 to 5%; Opportunistic Infrastructure at 0 to 5%; Direct Lending at 5 to 15%; and Special Situations at 5 to 15%. Below the graphics is text: We believe that alternatives can help solve our clients' top concerns. 1. Concentration to A.I.; 2. Rising Stock and Bond Correlation; 3. Access to Innovation; 4. Recession Risk. Source: J.P. Morgan A.M. GTA 2025, 2024. NACUBO-TIAA Study of Endowments (NTSE) as of the 2024 fiscal year (July 1, 2023 to June 30, 2024) and J.P. Morgan Private Bank Family Office Report. The data is representative of 658 U.S. colleges and universities. The information contained herein comes from sources believed to be reliable but neither J.P. Morgan or any of its affiliates warrant its accuracy and accept no liability for any direct or consequential losses arising from its use.

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Large family based on some of our large family office reports that are publicly available-- those are typically balance sheets north of $1 billion. They might allocate, on average, about 45%-46% to alternatives. There are subasset classes that we can go into.

The traditional high-net-worth investor-- the industry data tells us it's about 22%. And then the average retail investor, which are mostly accredited investors-- so think about $1 to $25 million in net worth-- on average, it's been about 4%. That's what the data tells us.

And that makes sense, though, if you think about high-net-worth individuals and retail individuals. It is a newer phenomenon, alternatives in portfolios.

Yeah, access to it has changed pretty dramatically the last couple of years with the rise of things like private market evergreen funds, and so forth, and the opening up of some of the substrategies that we can go into. You mentioned uncorrelated returns in some of these areas.

But I would always say-- when I talk to clients and they're saying, how should I think about allocating, I always start with, what's your mission? What is this an alternative to? Are you trying to achieve outsized returns versus public equity? Are you trying to think about how to drive more-- less correlated return streams? Where is it that you're trying to focus? And let's see if we can find a solution for you.

And I'd say today more than ever, the biggest concerns that our clients have, and the reason why their allocations are increasing, is because they recognize that there's pretty significant concentration in the public markets. The top 10 stocks in the public markets are now 40% of the market cap. Michael Cembalest in his outlook writes about how the top 41 AI stocks are driving 80% of the earnings growth in the public markets. So concentration of public markets is something that makes people nervous because there's a pretty big bet on things like AI in the public markets right now.

The second thing I would say, the biggest concern that our clients have and the reason that they're increasing their allocations, has been because of rising stock-bond correlations. You take a lot of your equity risk within public equities. You'd add bonds to think about how to protect. And does one zig when the other zags? And the reality is that for the last-- we could decide what period of time we want to look at. But they've been rising.

And then I'd say the fear of higher inflation and what that's going to mean for the cash that I'm holding, or to think about which assets can do well in an inflationary environment, is the third concern. And then the last, I would say, is about access to innovation. It's about the fact that, and we'll get into it when we finish with AI, the S-curve is happening before a lot of these companies even go public. And we'll talk about what, actually, that means. But I would say we try to look at alternatives to solve something in our clients' portfolios that they're trying to either protect against or access.

Great setup. And now let's just talk for a little bit before we dive deep into private credit and other things-- let's talk about, what does the pie look like for us and our clients as it relates to alternatives and what you actually put in--

Each of those boxes?

Yeah. Just give a sense.

A little flavor? OK. So again, it's going to depend on what everyone's trying to achieve. But let's just say our portfolio-- so when a client comes to us and say, hey, can you allocate to private markets, it's about 40% to 60% in equity-oriented risk. That could be core buyout exposure. That could be anywhere from 10% to 20% in growth and venture exposure.

That could be about 20% in real assets, made up mostly of infrastructure, but also real estate. Real estate has been really interesting lately. Just given what's happened over the last couple of years from a price perspective, we do feel like there's some momentum behind certain subsectors.

And then I would say that last piece is in credit. And that is a combination-- I know you want to talk about private credit and some of the headlines. That's ranged anywhere from 10% to 20% as well. And it's higher in times in which we think there's more stressed and distressed opportunities. And we'll talk about diving deep into each of those things. But that's, roughly speaking, what the allocations look like.

Excellent. So let's talk about private credit because every day, it seems like there's a new headline. And I think people woke up and said, well, I sort of understand private credit. And it's been something that's been a part of my portfolio.

But lately, it feels like it's the front page of the Wall Street Journal. So I want to unpack this a little bit. And I want to start about how we think about private credit, how we selected managers, how we looked at the space because you and I were talking, and I loved it. You have three truths. And so let-- give--

Dive into that a little bit?

Yeah, let's dive into that, a little bit about how you saw the universe and how we looked at it from a due diligence perspective.

So private credit bucket's a lot of things. The headlines have been a lot more about the direct lending side, lending senior secured top of the capital structure to places that the banks no longer really do because of the post-great financial crisis. There's a lot of regulations that got put in place that made it less efficient for a bank to lend to a small and medium-sized business.

In the direct lending space, when you think about it, there's a few-- to your point, when we set up in terms of wanting to invest in that space, we invest in less than six managers in that space. It's an industry that now has over 1,300 managers, over 3,500 funds. There's a lot of choice. And so I think sometimes, it's important to narrow down where we do think it's worth investing.

So we have six managers on our platform--

In senior direct lending, yeah.

--in senior direct lending. And there's 3,500 funds to choose from?

Yeah. And the point of what I was going to make was in that space, we've had Mary Rooney and Rachel Cascio, who help us diligence and research all of this-- we've all for the last-- since 2007, that we've been investing in this space, but really, since 2017, we've decided that the three-- the north compass of what we want to look for were folks that had a pre-GFC track record in privately negotiated loans, not just being a loan trader, but actually lending in the private markets. The second that we--

Pre the global financial crisis?

Yeah, having some sort of track record, something that we could look at. The second was that we didn't feel like there was a premium for going too far down market. So size of company mattered. So we always wanted to focus on that core middle market and upper middle market. Think of companies that have an EBITDA north of $50 million.

And the reason I say that is because when you look at industry data around interest coverage and defaults, there is a drop-off when you go to companies that are less than $50 million, which is OK if you're getting paid for-- a premium for taking that risk. We didn't feel like it was completely there. So that was the second thing that we've done over the last 10-plus years.

And then the third thing, I'd say, is a lot of the reasons why our clients invest in private credit was to provide diversification of portfolios. And to have any sector be overconcentrated in a portfolio, again, you either need to be paid for that risk-- we didn't feel like you necessarily were. And so we've avoided sector-specific direct lenders.

Those are the three things which make us feel good about the exposure that we have. But we're recognizing all the pressures that exist in the industry because of the rise of evergreen funds and other things that we can go into.

All right. Now I'm going to take you on the journey of all the things that are being discussed in private credit. And we're going to do a lightning round on this. So software-- obviously, AI disruption-- it's been going on for three or four years. But we woke up this year. And it was like, oh my god, AI is going to disrupt every company. And at that moment, AI was going to disrupt software.

Yes.

Correct?

Supposedly, yes.

Supposedly. Why did that relate so much to private-- credit software disruption and private credit?

So a lot of it was because when you looked at the industry, within the software model, a lot of these were high-recurring cash flows. They were pretty sticky businesses. And so it was one of these "great assets" for the direct lenders, senior secured top of the capital structure to invest, and a lot in enterprise software.

We all know how hard it is to change the software that JPMorgan uses within our systems. And the reality is that AI, Artificial Intelligence, and a lot of these apps and the move that we've just seen towards agentification and what the-- it's not just having an LLM that understands your data. It's actually using that to do tasks. That, all of a sudden, disrupted the model of software underwriting because it's hard to understand how sticky those businesses are anymore and whether or not they can be replaced.

Why it relates to private credit is because it ended up-- this is a stale number. It's about six months old. But it was about 31% of the private credit direct lending industry was to the software sector. And so everyone assumes that a lot of that stuff is going to have high defaults, you're not getting paid the risk, there's going to be-- it's going to be tough to get recoveries. And we can talk through the math behind some of that. But that's where it started, AI disruption in the software.

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Slide. Text: A Large Market Opportunity Aligned with a New Technology Cycle. The Potential for A.I. to Disrupt Services is Even More Significant Than Software. A bar chart has a y-axis from 0 to 14,000. There are two bars, a short one labeled U.S. Software GDP, which is $693 billion, and a tall one labeled U.S. Services GDP, which totals $13 trillion. The tall bar is segmented into different categories with numbers: Other, 1,675; Financial Services, 1,560; Food Services, 1,429; Recreation, 777; Transportation, 660; Healthcare, 3,315; Housing, 3,603. Source: U.S. Bureau of Economic Analysis, 2024 Gross Domestic Product.

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Software, just to put it into context as an overall market opportunity perspective, is just shy of $700 billion versus the services industry, which is about $13 trillion. So if I'm going to think about where AI is going to disrupt, it will certainly disrupt software. But it's also very much going to disrupt places like services. And we'll talk about-- when we talk about the AI opportunity. So I think just being balanced in all these things and how fast it's going to happen--

But the headlines coincided with software and private credit because the allocation of some of these funds was high was high in software.

And defaults have been really low.

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Slide. Text: Private Credit: Elevated starting yields in senior secured direct lending should provide a buffer if we enter a downturn. A bar chart titled Private Credit: Return Building Blocks. Text: Other considerations: portfolio leverage, short-term NAV fluctuations. There is a y-axis from 0% to 10%. The lowest bar is Base Rate (S.O.F.R) at a little more than 3%. The next bar is Spreads between around 4% to almost 9%. The next is O.I.D. at around 9%. The last bar is Credit Loss at around 9%. Next to the bar chart is a table titled Simplified Total Return Sensitivity. Total return, percent. In the table, the columns are titled Default Rate and the rows are titled Recovery Rate. There are six columns and nine rows. The columns are 0%, 2%, 4%, 6%, 8%, and 10%. For recovery rates 20% through 60%, at 0% default rate, the total return is 10%. At 2% default rate, for recovery rates between 20% and 35%, the return rate is 7%; for recovery rates between 40% and 60%, the total return is 8%. For 4% default rate, the recovery rates for 20% through 30% are 4%; for 35% through 40%, they are 5%; for 45% through 55%, they are 6%; and for 60%, it is 7%. For a default rate of 6%, with a recovery rate of 25%, the return rate is 1%; at 30% to 35% recovery rate, it is 2%; at 40 to 45% recovery rate, it is 3%; at 50% recovery rate, it is 4%; at 55 to 60% recovery rate, it is 5%; and at 60% recovery rate, it is 5%. At a default rate of 8%, for a recovery rate at 45%, the return rate is 1%; for a recovery rate at 50%, it is 2%; for a recovery rate at 55%, it is 3%; and for a recovery rate at 60%, it is 4%. Lastly, at a default rate of 10%, the recovery rate for 55% is 1% and for 60% it is 2%. This forms a downward step pattern of positive return rates.

Below these graphics is text: With a 10% yield starting point, default rates would need to be greater than 6% and recovery rates less than 40% to generate negative total returns over long-run. Private Credit Defaults. Dispersion in large vs. small companies. Default rates for core middle market companies (EBITDA: $25 to $50 million) greater than 4%, larger companies (EBITDA: greater than $50 million) less than 2%. Spreads on newly issued private credit loans stable at around 475 to 500 b.p.s Y.T.D. in 2025. Where you sit in the capital structure is critical. Leveraged loans average recovery rate for first-lien loans is around 62%; declines to around 23% for second-lien loans. Sources: (L.H.S.) J.P. Morgan. Data as of July 17, 2025. Assumptions: 10% yield starting point, 1x turn of portfolio leverage, long-term holding period. Total Return: Yield - (Default Rate times (1-Recovery Rate) times Portfolio Leverage). Assumes fees slash cost of debt offset by leverage. Time period assumed as life of the investment. 10% starting point based on J.P.M. I.B. F.I.C.C Research latest state (as of August 2025). (RHS) Bloomberg, August 2025. 1 Evercore I.S.I, June 2025. 2 J.P. Morgan North America Credit Research, October 2025. J.P. Morgan Private Bank.

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And that's something that when you underwrite private credit and you look at the base case and long-term capital market assumptions in that space, the model for senior secured direct lending, if you looked at companies that had an EBITDA of north of $200 million, or even $100 million, you would get a base rate-- call it SOFR-- plus a spread of-- when we underwrote this back in 2022, the market was telling you you can get a spread of anywhere from 550 basis points to 650 basis points over SOFR.

Then you'd also maybe get a point in what's called an original issue discount. So instead of lending you money at $100, I'd lend it to you at $99, and you'd pay me back at $100. So you'd get another percentage point of that return from there.

And then you'd have to assume that there were prepayment penalties. But then you'd also have to assume some losses from defaults. And the reality is that spreads have tightened. There's more capital in this industry. There's a lot of reasons why spreads have tightened. But it's not 550 to 650 anymore. It's closer to 450 to 550 for some of these returns.

Returns are coming down. And we've had outsized returns in private credit from 2022 to 2024. Then things got a little bit tighter. And the reality is that when you look at long-term capital market assumptions, it's really the 7% to 10% net return target. And they've outperformed that.

And so we've told a lot of our clients, get back to your strategic allocations because we don't think the premium is going to be as drastic as it's been for four years. And so I think some of the redemption pressure is coming from just portfolio reallocation.

So before you get there, just to follow this journey, we started with AI disruption, software companies, a higher allocation in private credit to software companies. And then you also just explained default rates and why returns are coming down.

Yes.

But then the other big headline is redemption pressure. And you and I have talked about this a lot. It's also the evolution of this evergreen structure. And so what is redemption-- issues have with evergreen structure? And why is that another big story in this?

So two things, one on the default rates rising and so forth-- I do feel like there's been some public appearances by the Jon Grays of the world and other that just talk about if it was 500 basis point spreads beyond the great financial crisis, what it actually does to returns-- I'm not going to break it down because we have less than 30 minutes to go through this. But it's worth the watch. I'll tell you that.

The second part of it is the redemption pressures. Starting four years ago, we actually created and anchored one of our first private market evergreen funds within private credit. And the concept was the following. In the traditional drawdown structure, a manager would invest over three to five years. In credit, it would typically be three years.

So you didn't know when you had to fund those capital calls in a drawdown structure. You'd lock it up for seven to 10 years. They'd try to invest over three years. The purpose of a reason why a lot of folks were investing in private credit was to get the distribution that would come off of these portfolios.

And so by the time they got fully invested, they started becoming disinvested because the loans would repay. And so a lot of folks have converted that senior secured corporate direct lending into these private market evergreen structures where they still got the prepayments. Maybe if you invest $100, you'd get $25 paid back in the course a year, et cetera.

And so structurally, we shifted to owning senior direct lending in private market evergreen funds because it provided more consistent distributions, which was the purpose of why clients invested behind these in the first place. The rise of those structures, though, does come with the ability, typically, for a tender offer fund to achieve up to 5% of a repurchase of the fund so that there's the option for liquidity, but never the guarantee. And so the reason why it's hitting headlines lately is because all these fears are coming at the same time where redemption pressures have increased.

Correct.

But the repurchases of what these funds are allowing is what the terms of these agreements have been, which is typically about 5%. And I'll just say one other thing, which is why it's making headlines-- is there are several of these funds who have limited repurchases to what the documents say, which is typically 5%.

And yet they're receiving net positive inflows. And they're not matching it. They're not netting it against redemptions. And the reality is that these private credit managers need to continue to invest these portfolios to deliver long-term performance, regardless of redemption pressures.

And so there's a lot going on the market right now because of this. We do expect that to continue for a period of time. It's hard to understand exactly what. But I do think you're going to read more about it. The reality is the fundamentals underlying this remain very stable.

So we're wrapping up on private credit folks here.

And we put out a piece about it, too.

And we put out a piece. And we've been doing a lot of stuff on it. Are you buying private credit here?

I am. But I am-- vintages matter. So having a portfolio that was built over the last three or four years versus having things that have lingered beyond that-- there might be some problems to the extent that it does go beyond that. Having that sector diversification, I think, really matters, and really focusing on the core middle market and above. I think those are some of the things that we're going to continue to invest behind and continue to back.

And then new opportunities in private credit-- you and I talked about two truths.

Yes, there can be two truths. I do think private credit-- everyone just assumes it's the direct lending side. And the reality is I would do two things right now. I would consider diversifying the underlying asset if you do want the distribution side of the equation, meaning don't just do corporate direct lending. Think about asset-backed lending, infrastructure lending. There's other things that you could diversify your asset base.

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Slide. Text: Private Credit: While overall default rates stay contained, we expect micro-credit cycles to emerge. Micro-Cycles to Emerge as Defaults Tick Up. Loan volume and default rate. A histogram shows loan volume at default rates between 2020 and 2025. The left side of the y-axis is labeled Volume and goes from 0 to $160 billion. The right side of the y-axis goes from 0% to 5%. There are two keys: Loans trading sub $80 billion and Loan default rate. The chart shows loans trading sub $80 billion decreasing between 2020 and 2021 at the same time as the default rate dips to around 1%, going up between 2021 and 2022 as the loan default rate increases, increasing dramatically in 2022 and staying high into 2023 along with the loan default rate, which goes up to around 3% in 2023; then the loan volume decreasing from 2023 to 2024 as the default rate continues to climb up; and staying steady between 2024 and 2025between around $80 and $100 billion as the loan default rate peaks in 2024 at close to 5%, then experiences a decline going into 2025 back to a little above 3%. Text: Sources: (LHS) J.P. Morgan, PitchBook, Bloomberg Finance L.P., S&P/IHS Market. Data as of November 2025. (RHS) Proskauer, JPM Global Alternative Investment Solutions, February 2026. Default rate represents average quarterly default rate.

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And the second thing is that there are micro cycles in credit that seem to happen every two to three years, anyways. We're starting to see some of those micro cycles exist. And so we have been allocating to some of the stress and distress managers. There's just a few left in the industry that we've partnered with.

It's a niche space.

But it is a nice ballast to the portfolio as you think about trying to protect against potential recessionary risk or other things, rising defaults, and folks that can actually use that as a positive in their portfolios.

So let's move on from private credit. And we started this call talking about the makeup of the equity market having large concentrated tech exposure and people trying to think about their overall portfolio. Uncorrelated returns is a buzzword in the industry. What else is there in the space of uncorrelated returns? And how are we thinking about it? And let's go through each one. And then we can dive into it.

Well, I always try to do things in threes. So I'm going to do-- I'm going to say the three things that we've been focused on have been infrastructure, which we've talked a lot about for the last couple of years. And the reason it's less correlated is because of the-- it depends on the underlying assets that we can talk through. There's digital, there's non-digital that we'll go through.

The second area that we're fairly focused on is uncorrelated hedge funds. It's in the name. But we can talk about what specifically that means. And then the third area that's had rising interest and an expanding investment ecosystem has been sports investing. And I don't know where you want to start.

I want to start in infrastructure. And I want to ask you-- you live and breathe this stuff every day. And I'm thinking about our clients and myself and how I'm thinking about it, which is there's a lot talk about data centers. Infrastructure funds have been around for a long time.

Long time.

Data centers-- obviously, the rise of data centers has not been nearly as prolific in--

Probably, reality-- 15 years-- 10, 15 years. It's pretty new.

And so break that down for me. Is it core infrastructure? Is it digital asset, which is basically data centers? How are you thinking about that?

Well, I think there are two sides. And there are some portfolio managers that mix them in their portfolio to give them the ability to toggle in and out of different markets and to create a long-lasting portfolio. I'll just say that. I would say on the digital infrastructure side, which digital is becoming a way of our life-- I know what it's like when I don't have Wi-Fi at home, not that we can work from home at JPMorgan. The concept is out there.

So there's the digital side of the equation, which my advice to clients and the advice that we-- when we look at managers is make sure that you are-- if you're going to take digital risk, you're getting paid digital returns. If you're taking that risk that end up being tech-oriented risk, understand that you're going-- we believe that you should get a return premium for taking that risk.

Right. So a higher return if you're investing in--

Yes, because I do think there's the view in the industry that we're-- we might end up in a place where we're overbuilding for AI. And so making sure that-- understanding the use of that data center, understanding what the agreements of that data center are, what risk you're underwriting-- those are all very important things to know.

But let me bring you back to why infrastructure because it's always-- yes, data centers and digital is very interesting. But why infrastructure in the portfolio?

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Slide. Text: Infrastructure: Consistent and Resilient Returns. A table with five columns and five rows. Above the table is a spectrum with two arrows. There are two categories for the spectrum: Primary Investment Goal and Risk. For Primary Investment Goal, Income is on the left-hand side of the spectrum and Value Appreciation is on the right-hand side. For Risk, Lower is on the left-hand side and Higher is on the right-hand side. For the investment style Core, the typical holding period is 7 to 10 plus years; the relative risk is lower, in parentheses (contract management); and an example within Traditional Infrastructure is Regulated Utilities. For the investment style Core-Plus, the typical holding period is 5 to 7 plus years; the relative risk is low to medium, in parentheses (contract management, higher leverage); examples from Traditional Infrastructure are airports, ports, and toll roads; and examples from Digital Infrastructure are long-term contracted towers and fiber optic networks. For the value-add investment style, the typical holding period is 3 to 7 years; relative risk is medium, in parentheses (repositioning, redevelopment, contract management, market, higher leverage). For the opportunistic investment style, typical holding period is 3 to 7 years and relative risk is higher, in parentheses, (development, redevelopment, market, high leverage). Examples from Traditional Infrastructure of the Value-Add and Opportunistic investment styles are Greenfield power plants; Examples from Digital Infrastructure are Expanding slash Greenfield data centers and developing new fiber networks. Sources: (RHS) MSCI, Bloomberg Finance L.P. Data based on availability as of June 2025. Outlooks and past performance are no guarantee of future results. It is not possible to invest directly in an index. Please refer to "Definition of Indices and Terms" for important information.

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I would say the non-digital side is even more attrac-- I like having a bit of digital opportunistically. But the non digital side site I love because-- I should say I like. I can never love anything. But I would say I like it because they're typically highly monopolistic assets.

You and I both know that we typically have one choice for who provides water in our home or power in our home. And some of these assets are 20, 30-year contracts. They're typically tied to a CPI, Consumer Price Index, plus a spread.

So they're inflation-adjusted because we all would pay-- whatever inflation is, we're going to have to pay whatever that end rate is. There's very high barriers to entry, especially if you think about places like ports and other things like moving infrastructure. It's hard to break into these spaces. And you can't just go rebuild these things.

And so the reason I say all those-- and they're very high-recurring cash flows. And so because of those things, those elements, whether or not we're in a recession or not, the reality is that we still have a need for these things. And so there are some GDP-sensitive areas of infrastructure.

But I'd say the core of what we like when a client wants to think about uncorrelated returns is focusing on the non-digital, which the primary return drivers are going to be distribution, not total return. To the extent you want a combination, I would think about adding in exposure to digital. And we have plenty of portfolios that help us think through all these aspects.

So uncorrelated hedge funds-- when you say that to me, and I think, obviously, hedge funds have been around for a while-- I would say that there was a time period where we didn't have as many of them in portfolios. And now it feels like we're in a time period where there's a lot talk about uncorrelated hedge funds and what they can do for portfolios. And people are, frankly, excited about it. When I think about them, though, is-- what type of hedge funds are these? Start there for me. Are these algorithmic hedge funds? How do I think about that?

We'll geek out a little bit.

Yes.

So we have been investing in this space through our asset management business for 31 years. So we're about to celebrate 31 years. And in that area, the focus has been on what we call uncorrelated hedge funds, which the primary underlying strategies have been relative value. So trading something within relative value could be within a capital structure or two companies in an industry as they're comparing them. And it could be macro-oriented, where you're not taking beta to the strategy and you're really thinking about global markets and economies and governments.

And then the third area, I would say, is the algos, the quant side of the equation. And the reason why it's gotten more interesting is because we went through a period post the great financial crisis where there was very little dispersion. Rates were sent-- 0%. And the volatility wasn't really there. That was a period where we called it the alpha winter for a lot of these hedge funds.

And since 2020, we've come out of the alpha winter. And the reason why there's the ability to outperform-- and I should say, hedge funds are not an asset class or an industry. There's over 9,000. And we invest in less than 100. But within that ecosystem, I would say the rise of the passive investor is creating market inefficiencies where if you are a quant trader and you can look at when options need to roll on a monthly basis for some of these active ETFs and other things, there's the ability for you to actually close the gap and make tiny pieces of returns that are less-- that are idiosyncratic to what the market's doing overall.

So I do think that the opportunity set has increased because of things like the rise of passive investors and active ETFs and other things where if you do have the data, you can understand it and put the risk on the right way. You can eke out less correlated return streams.

And just a final note on that-- we are seeing these uncorrelated hedge funds in insurance-dedicated funds.

That's true. There were a lot of people that said, oh, well, my-- the taxes that I pay on these things--

The taxes are high that you pay on uncorrelated hedge funds. And we are seeing people marry uncorrelated hedge funds with insurance-dedicated funds. And that's something that you can, obviously, talk to your advisor about.

Yes.

Finally, sports-- you said to me it's an asset class.

Yes. It's becoming an asset class.

What makes it an asset class?

The same reasons why I like the qualities of infrastructure are pretty similar to sports, meaning highly monopolistic in terms of the amount of teams that exist out there, high-recurring cash flows because they're typically tied to meteorites and other things that we can talk through, high barriers to entry in general. And what I would say is that in a world where AI disrupts a lot of things, the media companies have this need for live premium content. And one of the best places for premium content is in live content, which is sports and live entertainment. I don't really go to a Taylor Swift concert in a TV, but I tend to go in person. But let's put that aside.

It's going to make more and more sense, especially if humanity is taken over by AI.

Yes.

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Slide. Text: Sports: Differentiated Returns in Core P.E. with Added Sector Diversification. North American Sports Asset Returns vs. Other Asset Classes (percentage). A table compares sports asset returns vs other asset classes over several different time periods of increasing length. The first row is sports (R.A.S.F.I). For quarter to date, the percentage is 2.2. For year to date, the percentage is 18.2. For one year, the percentage is 18.2. For three year, the percentage is 21.4. For five year, the percentage is 16.9. For ten year, the percentage is 15.9. For 20 year, the percentage is 13. For a quarter to date, it is 3.4%. For year to date, it is 22.9%. For one year, the percentage is 22.9%. For three year, the percentage is 21.2%. For five year, the percentage is 11.7%. For ten year, the percentage is 12.3%. For twenty year, the percentage is 8.7%. The next row is U.S. equities. For quarter to date, it is 2.7%. For year to date, it is 17.9%. For one year, the percentage is 17.9%. For three year, it is 23%. For five year, it is 14.4%. For 10 year, it is 14.8%. For twenty year, it is 11%. The next row is U.S. Small Caps. For quarter to date, it is 2.2%. For year to date, it is 12.8%. For one year, it is 12.8%. For three year, it is 13.7%. For five year, it is 6.1%. For 10 year it is 9.6%. For 20 year it is 8.2%. For Media and Entertainment sector, the quarter to date is 8.4%; 35.6% year to date; 35.6% for 1 year; 46.1% for 3 year; 16.3% for 5 year; 16.8% for 10 year; and 14.1% for 20 year. For fixed income, the quarter to date is 1.9%; for year to date, 11.4%; for 1 year, 11.4%; for 3 year, 6.1%; for 5 year, negative 1.2%; for 10 year, 2.7%; for 20 year not applicable. For commodities, quarter to date is negative 0.3%; year to date is negative 0.2%; 1 year is negative 0.2%; 3 year is negative 3.5%; 5 year is 6%; 10 year is 5.8%; and 20 year is 1.2%. For private equity (1), quarter to date is 3.3%; year to date is 10.5%; 1 year is 10.5%; 3 year is 6.6%; 5 year is 14.2%; 10 year is 14.8%; and 20 year is 13.5%.

For Private Credit (1), quarter to date is 1.8%; year to date is 7.4%; 1 year is 7.4%; 3 year is 8.2%; 5 year is 10.4%; 10 year is 8.1%; and 20 year is 8.8%. For real assets (1), quarter to date is 1.3%; year to date is 4.5%; 1 year is 4.5%; 3 year is 1.8%; 5 year is 9.8%; 10 year is 6.9%; and 20 year is 7.2%. Source: S&P, MSCI Private Markets (Burgiss), Arctos. U Michigan-Ross. Each segment represented by the following USD indexes: Global Equities (MSCI, ACWI), U.S. Equities (S&P 500), U.S. Small Caps (Russell 2000), U.S. Media and Entertainment Sector (MSCI USA Media and Entertainment) ,Fixed Income (Barclays Capital U.S. 7 to 10 year aggregate bond index), Commodities (S&P GSCI), Private Equity (Burgiss North American Equity TWR Index), Private Credit (Burgiss North America Debt TWR Index), Real Assets (Burgiss North America Real Assets TWR Index). Note: Private Equity, Private Credit, and Real Assets represent end-to-end time-weighted returns as of prior quarter due to reporting lag.

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So what I would say in sports-- and there's now even an index. The University of Michigan put out what's called the RASFI index, which stands for the Ross-Arctos-- let's see if I can get this right-- Sports Franchise Index. And what it shows you is over three, five, 10, 20 years, sports investing in the major four leagues has actually outperformed every subasset class.

It breaks it down. And even in the last three years, it's outperformed the S&P. Even in the last five-- it's just pretty incredible to think about it. So now the question is, but how are they doing that? And a lot of it is because of the media rights, which I just said, which the value's been going up.

The second thing I'd say is that there's a lot of sports and sports adjacency things. So it's not just owning the team. It's, do you own the real estate? Do you own the stadium? Do you own the real estate around the stadium? Are there opportunities to optimize what you do in the stadium?

The other biggest thing is this-- while there's global fragmentation in the economy, there's globalization in sports. Getting more eyes on these sports and knowing how to take these teams international, I think, is a big focus.

It's fascinating.

So there's a lot of just really interesting aspects that remind me of some of the qualities of infrastructure. We could talk through valuations and everything else. But it's a place that we've dived deep inside. We've created access to both individual teams as well as create portfolios. And it's something that I think will continue for the next five to 10 years.

So we're going to move on now to-- I'll call it, where do you take equity risk? And where are there opportunities in the market that provides you for that? And really, this is now-- we're going to go world backdrop now. And so if I thought of one place that I get a lot of questions on-- is defense.

Fair.

And the theme around defense-- it's very clear we're going to spend more money on defense. And so how are we looking at that? We've been in defense for a long time on our alternatives platform.

Pieces of it, yes.

Pieces of it. But walk me through because I think that's a space that everybody's really interested in getting exposure to.

And we, as a firm, started looking even more closely of it when Russia invaded Ukraine. And we announced last year our $1.5 trillion commitment to what we call SRI, which is our Security and Resiliency Initiative. And within that, we spent a lot of time thinking about, within asset and wealth management, how do we create access for our clients that appreciate the work that the firm is doing? It's all publicly available.

There's four major areas of investment, which if you think about it, a lot of it is securing supply chains and advanced manufacturing. A lot of it is thinking through energy independence, what that actually means. And the last couple of weeks have made us really rethink that. Aerospace and defense is another big one. And then I'd say frontier technologies. A recent addition has been in pharmaceuticals. And then within that, there's 28 subcategories.

So what does that all mean? For us, we do think-- we are creating a portfolio where we've asked several managers to actually create dedicated funds for us that we're going to offer-- think through offering to our clients access to this. But we do think having a portfolio approach, thinking through the spectrum between venture and growth and some of the opportunities, we are seeing an incredible amount of innovation that's taking place. Now we've just got to match it with risk and return as to what we're getting.

But global defense and security is certainly a theme that we think will continue. And I think some of it is catalyzed by AI and being able to do autonomous. But even broader than that, there's just-- there's now a track record in a lot of these areas with folks that we've partnered with to think through, how do we create a piece of our portfolio that does think through those four main pillars, plus a little bit in health care as well?

And we've mentioned energy. And we talked about infrastructure before as a slice of energy, obviously, as well.

Spot on.

But we didn't-- we haven't focused on industrials. And so you talk about defense. But also, what's getting interesting is manufacturing in this country and industrials in general. Is there some place for that in the portfolio as well?

Yeah. One thing on energy before I forget is I think we've looked at energy. And we've been investing in energy since really 2005, 2006. But the-- just the one thing to keep in mind--

Shout-out to Mike Cembalest's energy paper.

Oh, it's incredible.

It's incredible.

It's just a proper deep dive on the space. And it's very balanced.

After your 8:00 AM coffee with us, I suggest now reading that.

I think it's over 100 pages. But what I would say in energy is that if you haven't looked at it in a long time, now that in-- if you take the US, for example, now that we've drilled over 200,000 wells and we have the data behind it, it is no longer the exploration phase of energy.

It used to be five to seven years before you became cash flow positive in a lot of these deals. And with technology and with what's already happened because of fracking in the early 2000s and the-- around the GFC, we are able to generate a differentiated return stream today than we've ever done before because of the wells that have already been built and because of us understanding the dynamics of energy and what energy independence is going to mean.

So for those of our client-- we are allocating to energy private equity managers. It just so happens if you look at the industry from even 2017 to today, we went from having over 72 general partners in the industry to less than 10. And so there's just a lot less people that are doing it. But I would say--

Is the reason there's a lot less people doing it-- is it because it just feels like in general-- in the past, it's been like a bet on oil and nat gas prices?

Yeah. It was a lot of exploration. It a lot of risk. You didn't get paid the return. And there were some people that truly just went out of business. And then there were others that weathered the storm and then figured out what this new model was going to be. And it's a lot of these industries that have been overbuilt, like what we did when we were fracking shale 1.0. 2.0 is sometimes better. And it sometimes reminds you of all the risks.

And I'd also say the companies themselves-- what it took to go from being a private to public company and what the public markets would value was the free cash flow, was having less leverage. So you've seen all those things come down. And that industry has received, really, nothing from a multiple expansion perspective.

So now just imagine when you think of the demand that's expected to come from energy independence. I'm not going to say it's coming. But it's another potential tailwind that could exist. That wasn't what you asked me, though. You asked me about industrials.

I appreciate that you did that. So let's hit industrials. And then I want to talk AI.

I would just say within industrials, we've actually focused-- given the reindustrialization of America. And that is one theme, not to mention Europe needing Europe for Europe and thinking through what global fragmentation is going to mean.

Within industrials, there's a lot of businesses that when you think about your daily lives, are going to be hard to, again, disrupt-- be disrupted by AI, whether it's the packaging of my food or how actually-- the things that-- when we rebuilt our headquarters, the need to have the outside elevators and all the services and resources around what we're building in America. We need investment behind that.

And what I would say is that's a very generic thing. When you actually look at some of the core private equity managers that we're focused on, the folks that have been able to keep a premium to public equities without taking tech risk and have done it in places like industrials-- that, to us, is a really attractive area for us to focus. So when someone says to me, all right, core private equity might be 40% of the risk you put in your portfolios, what subsectors are you overweight, I would say it's really defense, industrials, and then a bit of health care as well.

Very interesting. So let's finish up on artificial intelligence, also in the news every day.

Yes.

It's been-- I don't know. ChatGPT launched three years ago. And obviously, it's part of our everyday life, and Claude as well. And a lot of clients say, how do I get into this American innovation? There's a lot going on in this space. It is very clear, though, a lot of it is happening in the private markets. It's something like a $13 trillion market if you think about those types of companies. And I think that's bigger than the S&P-- the energy sector in the S&P 500. It is that big.

And so when I think about our alternatives platform and I think about our access to some of these incredible managers that invest in this space, that's why I'm ending here, because I think that people are going to say to themselves, and I get this often, how do I invest in AI? What does that look like? Is it in the private markets? Is it in the public markets? Is it AI-adjacent companies? Is it actual AI companies? So when you think about your alternatives platform, what do you think's going on in this space that's interesting?

And in order to get to AI, you do need what I just talked about, which is the energy side of the equation. That is the bottleneck. So energy, power-- I should have said that-- is a broader theme in terms of sector overweights because we've-- haven't focused on the infrastructure needs. But now let's talk about, actually, AI.

And I think a year ago versus today, a year ago when I was talking to clients, they'd say, I've got the Mag Seven, I'm good. And the last couple of months have made us rethink that because when you look at Mag Seven returns just in the last quarter versus the breakout when you look at some of these subindexes of software, which is lower, data centers, which is higher, there's starting to become dispersion.

And people are starting to rethink. And they're asking us, is the-- when you came to us a couple of years ago and said, how do we access AI, our thesis was actually in the public markets. It was companies like JPMorgan and others-- could benefit from what's happening in AI because it was a lot about figuring out our data and using LLMs.

There's two shifts that are taking place, though, right now. One is the move towards agentification, the ability to build agents, Claude Code, some of these, which are scaling faster than anything we've ever seen in our history. That's a proven fact.

There's a lot of people that have debated about multiples and how this looks and all this kind of stuff. And the valuation is what you just said. If you look at the Mag Seven, the one that had the largest market cap at the time when they went public was Meta. And I believe it was $104 billion. When you look at the top five private companies in AI today, or AI-enabled, the smallest one has a market cap of $230 billion.

And then some are close to a trillion.

Some are close to a trillion, or some are publicly announced at even being slightly above a trillion.

Correct.

So the point about S-curve is happening before a company goes public and all that-- it's real. But that shift has only just started to take place over the last 12 to 18 months. I don't think the world needs a bunch more LLMs. I think we've understood that. And now there's this next phase that's starting to come up, which is about the application layer.

When you look at last year, in 2025, the amount of companies in the private markets that entered $5 billion plus in market cap-- over half of them were AI applications. And many of them didn't even exist five years ago.

So you're still talking in private markets? So we're seeing this through some of our managers.

Yeah, you're starting to see they put some chips on the table. They're seeing how these companies are growing. They're understanding, do you own the data? Do you own the client? Are you a feature? Are you a fad? Are you an actual platform? What are those things? And you're starting to see some of that come to life today more than you've ever had in the last five years.

Can you define for us what that would look like as an alternative investment?

In terms of what we would offer?

Yes.

Listen, for qualified clients, there are single-company opportunities that we do offer and some that-- I would always say in that space, if there's something that a client would want to build access to, let us know because there's secondary access. There's other ways in which we can access for the qualified clients.

And then I would also say sometimes in periods of technological shifts and periods of deep innovation, some of the best ways to access it is not just by picking a single fund manager. It's actually allocating to a portfolio because we did an analysis at the end of last year. And we said, if you looked at the top 30 private companies, which general partner represented one or many or 10 or however many? And we did this analysis and we realized when you represent one of these that's scaling pretty fast, it's hard to also back the competitor.

And so what we've done is in this space, we've built these portfolios that go across venture and growth. We've selected a few managers to put in one access point where we don't add layers of fees. We don't add a management fee on top of it. But we truly feel like right now, if folks want to think about putting some chips on the table, it's to do it through a portfolio rather than some single funds. There are a couple of caveats to that.

But what I would say is that we're starting to shift a little bit earlier stage because we do think that now the foundational layer has been built. There's the ability for us to invest behind a lot of the shifts within applications and the agentification that's taking place.

KK, this is excellent.

You're biased.

No, I am biased. But there is a lot to unpack here. As we wake up every day with news, your space has a lot of really interesting investment opportunities. And so I think about everything from energy to AI to our deep dive on private credit to industrials-- there's a lot here. And so when you do finish your coffee and you're done with our morning meeting, please call your advisor. They can do deep dives with you. They can walk through anything you need. And of course, KK and her team are available as well.

Yeah. Our most important thing is understanding the outcomes that client wants to achieve and figuring out if we can look to alternatives to be able to solve that. And sometimes, we can't. And sometimes, it becomes an increasing part of the conversation and fun to learn and understand a lot more about.

Lots to learn. Thank you, KK.

Thank you.

All right.

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Limited liquidity for private equity. investments in private equity funds are intended for long-term investors who have the financial ability and willingness to accept the risks associated with making speculative and primarily illiquid investments. Interests in the private equity funds are generally not redeemable. An investor in such a fund may not freely transfer, assign or sell any interest without the prior written consent of the fund manager. An investor may not, save in particular circumstances, withdraw from a private equity fund. Interests in private equity funds will not be registered under the U.S. Securities Act of 1933, as amended or any other securities laws in any jurisdiction. There is no liquid market for such interests and none is expected to develop. Consequently, a commitment may be difficult to sell or realize. Limited liquidity generally. interests are not publicly listed or traded on an exchange or automated quotation system. There is not a secondary market for interests, and as a result, invested capital is less accessible than that of traditional asset classes. Also, withdrawals and transfers are generally restricted. Potential conflicts of interest. Investors should be aware that there will be occasions when a private equity fund's general partner and its officers and affiliates may encounter potential conflicts of interest in connection with the fund. Fund professionals may work on other matters and, therefore, conflicts may arise in the allocation of management resources. The payment of carried interest to the general partner may Create an incentive for the general partner to cause the private equity fund to make riskier or more speculative investments than it would in the absence of such incentive.

Risks associated with infrastructure investments generally. An infrastructure investment is subject to certain risks associated with the ownership of infrastructure and infrastructure-related assets in general, including: the burdens of ownership of infrastructure assets; local, national and international economic conditions; the supply and demand for services from and access to infrastructure; the financial condition of users and suppliers of infrastructure assets; changes in interest rates and the availability of funds, which may render the purchase, sale or refinancing of infrastructure assets difficult or impracticable; changes in environmental laws and regulations, and planning laws and other governmental rules; environmental claims arising in respect of infrastructure assets acquired with undisclosed or unknown environmental problems or as to which inadequate reserves have been established; changes in the price of energy, raw materials and labor; changes in fiscal and monetary policies; negative developments in the economy that depress travel; uninsured casualties; force majeure acts, terrorist events, underinsured or uninsurable losses; sovereign and sub-sovereign risks; contract counterparty default risk. Risks of certain investments. The securities of portfolio companies and the ability of such companies to pay debts could be adversely affected by interest rate movements, changes in the general economic or political climate, or the economic factors affecting a particular industry, changes in tax law or specific developments within such companies. The securities in which a private equity fund will invest generally will be among the most junior in the portfolio company's capital structure, and thus may be subject to the greatest risk of loss. Most of a private equity fund's investments will not have a readily available public market, and disposition of such investments may require a lengthy time period or may result in distributions in kind to investors. A private equity fund's manager generally has a limited ability to extend the term of the fund, therefore the fund may have to sell, distribute or otherwise dispose of investments at a disadvantageous time as a result of dissolution. Speculation. Alternative investments often employ leverage, sometimes at significant levels, to enhance potential returns. Investment techniques may include the use of derivative instruments such as futures, options and short sales, which amplify the possibilities for both profits and losses and may add volatility to the alternative investment fund's performance. Taxation considerations. An investment in a private equity fund or hedge fund may involve complex tax considerations, which may differ for each investor. Each investor is advised to consult its own tax advisers. Changes in applicable tax laws could affect, perhaps adversely, the tax consequences of an investment.

Valuation. Because of overall size or concentration in particular markets of positions held by the alternative investment fund or other reasons, the value at which its investments can be liquidated may differ, sometimes significantly, from the interim valuations arrived at by the alternative investment fund. Private investments are subject to special risks. Individuals must meet specific suitability standards before investing. This information does not constitute an offer to sell or a solicitation of an offer to buy . As a reminder, hedge funds (or funds of hedge funds), private equity funds, real estate funds often engage in leveraging and other speculative investment practices that may increase the risk of investment loss. These investments can be highly illiquid, and are not required to provide periodic pricing or valuation information to investors, and may involve complex tax structures and delays in distributing important tax information. These investments are not subject to the same regulatory requirements as mutual funds; and often charge high fees. Further, any number of conflicts of interest may exist in the context of the management and/or operation of any such fund. For complete information, please refer to the applicable offering memorandum. Securities are made available through J.P. Morgan Securities LLC, Member FINRA, and SIPC, and its broker-dealer affiliates.

Hedge funds (or funds of hedge funds) often engage in leveraging and other speculative investment practices that may increase the risk of investment loss. These investments can be highly illiquid, and are not required to provide periodic pricing or valuation information to investors, and may involve complex tax structures and delays in distributing important tax information. These investments are not subject to the same regulatory requirements as mutual funds; and often charge high fees. Further, any number of conflicts of interest may exist in the context of the management and/or operation of any such fund. For complete information, please refer to the applicable offering memorandum. Liquid alternative funds are registered funds that seek to accomplish the fund's objectives through non-traditional investments and trading strategies. They differ significantly from both hedge funds and traditional mutual funds because they can be redeemed on any business day, they are said to be "liquid." Such funds do not follow the typical buy and hold strategy of a traditional mutual fund and generally hold more nontraditional investments and use more complex trading strategies than a traditional mutual fund, which may make an investment in a liquid alternative fund riskier. Non-traditional investments may include, but not limited to private equity, derivatives, commodities, real estate, distressed debt and hedge funds. While investments in private equity funds provide potential for attractive returns, access to opportunities not available in the public markets and diversification, they also present significant risks including illiquidity, long-term time horizons, loss of capital and significant execution and operating risks that are not typically present in public equity markets. Private equity funds typically have a 10-15 year term and will begin to monetize investments after holding them for 4-5 years.

Hedge funds (or funds of hedge funds) often engage in leveraging and other speculative investment practices that may increase the risk of investment loss; can be highly illiquid; are not required to provide periodic pricing or valuation information to investors; may involve complex tax structures and delays in distributing important tax information; are not subject to the same regulatory requirements as mutual funds; and often charge high fees. Further, any number of conflicts of interest may exist in the context of the management and/or operation of any hedge fund. Economy, currency, tax and market conditions, including market liquidity, may increase the risks of these investments and may impact performance of the funds. The views and strategies described herein may not be suitable for all investors, and more complete information is available which discusses risks, liquidity, and other matters of interest. Hedge funds (or funds of hedge funds) often engage in leveraging and other speculative investment practices that may increase the risk of investment loss; can be highly illiquid; are not required to provide periodic pricing or valuation information to investors; may involve complex tax structures and delays in distributing important tax information; are not subject to the same regulatory requirements as mutual funds; and often charge high fees. Further, any number of conflicts of interest may exist in the context of the management and/or operation of any hedge fund Any investment associated with leverage will include additional risks such as implied volatility, exposure to rising interest rates (borrowing costs) and margin calls, which may occur if the underlying investment declines below its minimum lending values. Leverage will have the effect of magnifying losses or gains. Please note that lines of credit are extended at the discretion of J.P. Morgan, and J.P. Morgan has no commitment to extend a line of credit or make loans available under the line of credit. Margin calls may include sale of the asset serving as collateral if the collateral value declines below the amount required to secure the line of credit. In exercising its remedies, J.P. Morgan will not be required to marshal assets or act in accordance with any fiduciary duty it otherwise might have.

KEY RISKS. This material is for information purposes only and may inform you of certain products and services offered by private banking businesses, part of J.P. Morgan Chase & Co. ("JPM"). Products and services described, as well as associated fees, charges and interest rates, are subject to change in accordance with the applicable account agreements and may differ among geographic locations. Not all products and services are offered at all locations. If you are a person with a disability and need additional support accessing this material, please contact your J.P. Morgan team or email us at accessibility dot support at j p morgan dot com for assistance. Please read all Important Information. GENERAL RISKS & CONSIDERATIONS. Any views, strategies or products discussed in this material may not be appropriate for all individuals and are subject to risks. Investors may get back less than they invested, and past performance is not a reliable indicator of future results. Asset allocation/diversification does not guarantee a profit or protect against loss. Nothing in this material should be relied upon in isolation for the purpose of making an investment decision. You are urged to consider carefully whether the services, products, asset classes (e.g. equities, fixed income, alternative investments, commodities, etc.) or strategies discussed are suitable to your needs. You must also consider the objectives, risks, charges, and expenses associated with an investment service, product or strategy prior to making an investment decision. For this and more complete information, including discussion of your goals/situation, contact your J.P. Morgan team.

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YOUR INVESTMENTS AND POTENTIAL CONFLICTS OF INTEREST. Conflicts of interest will arise whenever JPMorgan Chase Bank, N.A. or any of its affiliates (together, "J.P. Morgan") have an actual or perceived economic or other incentive in its management of our clients' portfolios to act in a way that benefits J.P. Morgan. Conflicts will result, for example (to the extent the following activities are permitted in your account): (1) when J.P. Morgan invests in an investment product, such as a mutual fund, structured product, separately managed account or hedge fund issued or managed by JPMorgan Chase Bank, N.A. or an affiliate, such as J.P. Morgan Investment Management Inc.; (2) when a J.P. Morgan entity obtains services, including trade execution and trade clearing, from an affiliate; (3) when J.P. Morgan receives payment as a result of purchasing an investment product for a client's account; or (4) when J.P. Morgan receives payment for providing services (including shareholder servicing, recordkeeping or custody) with respect to investment products purchased for a client's portfolio. Other conflicts will result because of relationships that J.P. Morgan has with other clients or when J.P. Morgan acts for its own account. Investment strategies are selected from both J.P. Morgan and third-party asset managers and are subject to a review process by our manager research teams. From this pool of strategies, our portfolio construction teams select those strategies we believe fit our asset allocation goals and forward-looking views in order to meet the portfolio's investment objective. As a general matter, we prefer J.P. Morgan managed strategies. We expect the proportion of J.P. Morgan managed strategies will be high (in fact, up to 100 percent) in strategies such as, for example, cash and high-quality fixed income, subject to applicable law and any account-specific considerations.

While our internally managed strategies generally align well with our forward-looking views, and we are familiar with the investment processes as well as the risk and compliance philosophy of the firm, it is important to note that J.P. Morgan receives more overall fees when internally managed strategies are included. We offer the option of choosing to exclude J.P. Morgan managed strategies (other than cash and liquidity products) in certain portfolios. The Six Circles Funds are U.S.-registered mutual funds managed by J.P. Morgan and sub-advised by third parties. Although considered internally managed strategies, JPMC does not retain a fee for fund management or other fund services. LEGAL ENTITY, BRAND & REGULATORY INFORMATION In the United States, bank deposit accounts and related services, such as checking, savings and bank lending, are offered by JPMorgan Chase Bank, N.A. Member FDIC. JPMorgan Chase Bank, N.A. and its affiliates (collectively "JPMCB") offer investment products, which may include bank managed investment accounts and custody, as part of its trust and fiduciary services. Other investment products and services, such as brokerage and advisory accounts, are offered through J.P. Morgan Securities LLC ("JPMS"), a member of FINRA and SIPC. Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. JPMCB, JPMS and CIA are affiliated companies under the common control of JPM. Products not available in all states.

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