(Reuters) – J.P. Morgan analysts have criticized alternative investments, stating that they anticipate lower returns than traditional assets.

After an assessment of the expected return for the asset class over the next twelve months and a comparison to traditional assets’ 12%, the brokerage downgraded alternative to “underweight”, from “overweight”.

Analyst Nikolaos Panigirtzoglou stated that the outstanding value of alternatives assets such as hedge funds or private debt has fallen 10% to $25 trillion this year.

The brokerage stated that the market share for alternatives to total assets remains at an all-time high.

A combination of record high inflation and market sell-offs has clouded the outlook for alternatives assets even though hedge funds and private equity have had strong performances this year.

JPM’s analysis has shown that in 2022 the proportion of total assets with alternatives has hit a record high at 13.7%, up from 7.6% at the start of 2007.

Panigirtzoglou stated that while the public markets have already priced in recession risks and digital assets have risen significantly after the collapse of USD. However, there are some other assets like private equity and private debt which have seemed to be lagging a bit.

TerraUSD was one of the most valuable stablecoins in the world earlier this month. It lost three-quarters of its value, which spooked cryptocurrency investors.