JPM Technicals
1. Bond Duration
What It Is:
• Measures a bond’s sensitivity to interest rate changes.
• Higher duration = more price movement when rates shift.
Why UHNW Clients Care:
• Large fixed-income allocations → duration shapes volatility.
• Rising rates hurt long-duration bonds; falling rates boost them.
• Used to match duration to liquidity needs, trust payouts, and spending policies.
2. Convexity
What It Is:
• Measures how duration itself changes as interest rates move.
• Explains why long-duration bonds react non-linearly to rate swings.
Why UHNW Clients Care:
• Matters in big portfolios with long-duration muni ladders, corporates, or treasuries.
• Higher convexity = more protection in volatile rate environments.
3. Yield Curve
What It Is:
• Relationship between short-term and long-term interest rates.
• Normal, inverted, or flat.
Why UHNW Clients Care:
• Inversion signals recession risk → adjust equity exposure + duration.
• Drives decisions on: municipal ladders, opportunistic credit, and cash deployment.
4. Muni Bonds (Tax Considerations)
What They Are:
• Tax-exempt bonds issued by state/local governments.
Why UHNW Clients Care:
• Clients with $10M+ benefit from tax-free income.
• Attractive in high-tax states (NY, NJ, CA).
• Can use barbell or ladder strategies for liquidity planning.
• Lower credit risk + strong demand → portfolio stabilizer.
5. Tax-Equivalent Yield
What It Is:
• Converts a tax-free muni yield into a taxable equivalent yield.
Why UHNW Clients Care:
• Helps compare muni vs corporate vs Treasuries.
• Essential when structuring tax-efficient UHNW income portfolios.
6. Capital Structure (Where Debt vs Equity Sits)
What It Is:
• Hierarchy of claims: secured → unsecured → subordinated → equity.
Why UHNW Clients Care:
• Helps evaluate credit risk inside private credit, corporate bond sleeves, or alternatives.
• Important for understanding where risk is hiding in income-producing assets.
7. Equity Risk Premium
What It Is:
• Expected return of stocks over risk-free rate.
Why UHNW Clients Care:
• Guides long-term equity exposure.
• Helps justify staying invested vs hoarding cash.
8. Beta (Market Sensitivity)
What It Is:
• Measures how much a stock/sector moves relative to the market.
Why UHNW Clients Care:
• UHNW portfolios avoid concentrated high-beta exposure (e.g., speculative AI names).
• Used to size positions and reduce volatility.
9. Standard Deviation (Volatility)
What It Is:
• Measures variability of returns.
Why UHNW Clients Care:
• High volatility → poor behavioral outcomes.
• Helps place clients in the right model portfolio / risk band.
10. Correlation
What It Is:
• Measures how two assets move relative to each other.
Why UHNW Clients Care:
• Drives diversification benefits.
• Guides decisions on EM, Europe, commodities, real estate, hedge funds.
11. Sharpe Ratio
What It Is:
• Measures return per unit of risk (volatility).
Why UHNW Clients Care:
• UHNW demand high risk-adjusted returns, not just raw performance.
• Used to evaluate managers, hedge funds, private funds.
12. Fixed Income vs Equities in Rate Cycles
What It Means:
• Rate hikes → bonds more attractive, growth stocks pressured.
• Rate cuts → equities, real assets outperform.
Why UHNW Clients Care:
• Directly dictates their rebalancing and opportunistic deployments.
13. Private Credit
What It Is:
• Direct lending to middle-market companies; higher yield than public bonds.
Why UHNW Clients Care:
• Provides high income and diversification.
• BUT carries liquidity + credit cycle risks → need sizing discipline.
14. Alternatives (Real Estate, Hedge Funds, PE)
What They Are:
• Non-public market investments that offer diversification, income, or return premium.
Why UHNW Clients Care:
• Reduces volatility.
• Provides low-correlation returns.
• Real estate → inflation hedge.
• PE → long-term growth premium.
15. Liquidity Buckets
What It Is:
• Segmenting assets into:
– Immediate liquidity (cash)
– Intermediate liquidity (public markets)
– Illiquid (PE, real estate)
Why UHNW Clients Care:
• UHNW goals often include multi-year cash flow (trusts, philanthropy, gifting).
• Prevents forced selling during downturns.
16. Rebalancing Logic
What It Is:
• Resetting portfolio weights back to target.
Why UHNW Clients Care:
• Manages drift from concentrated winners (e.g., AI).
• Maintains disciplined risk exposure.
17. Concentration Risk
What It Is:
• Excessive exposure to one stock/theme/sector.
Why UHNW Clients Care:
• Tech-heavy clients often come in with concentrated equity positions.
• PB must unwind risk without triggering tax landmines.
18. Tax Loss Harvesting
What It Is:
• Selling losses to offset gains.
Why UHNW Clients Care:
• Very important in taxable UHNW accounts.
• Locks in losses while keeping exposure via replacement assets.
19. Cash Drag
What It Is:
• Too much cash reduces long-term returns.
Why UHNW Clients Care:
• UHNW often sit on millions in cash → needs deployment strategy.
• Rising yields make this conversation more nuanced.
20. Real Assets (Real Estate, Infrastructure, Commodities)
What They Are:
• Physical or cash-flowing assets outside public markets.
Why UHNW Clients Care:
• Inflation resistance.
• Diversification vs equities.
• Student housing = strong real asset example.
21. Behavioral Finance
What It Is:
• How emotions drive poor decisions (panic selling, performance chasing).
Why UHNW Clients Care:
• Wealth preservation relies on discipline, not short-term bets.
• Analyst must coach clients through volatility.
22. Active vs Passive Management
What It Is:
• Passive = index tracking.
• Active = security selection, alpha attempts.
Why UHNW Clients Care:
• Blended approach works best.
• Active used in less efficient markets (EM, small/mid-cap).
23. Hedge Funds (PB Overview)
What They Are:
• Long/short strategies capturing differentiated returns.
Why UHNW Clients Care:
• Reduce volatility, provide downside protection.
• Not performance-chasing vehicles — risk smoothing.
24. ESG / Impact Investing
What It Is:
• Investing aligned with values/environmental/social governance.
Why UHNW Clients Care:
• Important for foundations, next-gen wealth, legacy goals.
25. Trusts & Estate Considerations (High Level Only)
What It Is:
• Structuring wealth to minimize taxes & maximize legacy.
Why UHNW Clients Care:
• PB analysts don’t give legal/tax advice but MUST understand basics:
– Liquidity for estate tax
– Concentration inside trusts
– Funding charitable vehicles