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    1. Fixed Income Funds

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    Fine-tuning a bond portfolio as inflation hits the high notes

    Investing across the full spectrum of fixed income solutions to manage risk while seeking to optimise yield in an inflationary world.

    JPMorgan Income Fund
    JPMorgan Global Strategic Bond Fund
    JPMorgan Global Bond Fund

    FIXED INCOME IN AN INFLATIONARY WORLD

    Prolonged inflation, central bank tightening and slower economic growth will likely persist, prompting some investors to work harder in the search for more attractive income prospects1.

    2. Source: FactSet, World Bank, J.P. Morgan Asset Management. Data as of 31.03.2022. G7 refers to Group of Seven nations - Canada, France, Germany, Italy, Japan, the UK and the US.

    Inflation remains a key focus amid tight supply chains, semiconductor shortages, higher energy and food prices and rising wage costs. In Australia, the annual consumer price index rose to 5.1% in the March 2022 quarter3 because of higher housing construction costs and fuel prices. The Reserve Bank of Australia has responded to this higher inflation by increasing rates to 0.85%4 in June 2022. This is matched by the US Federal Reserve (Fed) as they are likely to continue raising rates over the balance of 2022. We believe the Fed will look to get to at least 3% on the policy rate as quickly as possible before reassessing the fundamental backdrop.

    In today’s environment, it’s crucial to employ an unconstrained and flexible approach to differentiate and invest where opportunities can be found – with a particular focus on seeking quality and higher yielding allocation ideas.



    FIXED INCOME SOLUTIONS IN AN INFLATIONARY WORLD

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    Seeking out income potential

    JPMorgan Income Fund
    GlobalStrategicBond_Card_768x220

    Focusing on a defensive approach

    JPMorgan Global Strategic Bond Fund
    GlobalBondFund_Card_768x220

    Adding duration to a bond portfolio

    JPMorgan Global Bond Fund

    WHERE WE SEE OPPORTUNITIES

    1. Diversifying across the fixed income spectrum

    An unconstrained approach can help identify the high-conviction investing ideas for a diversified fixed income portfolio.

    As market conditions evolve, allocating across the full fixed income spectrum - traditional assets such as government and investment-grade (IG) bonds as well as non-traditional assets such as securitied5 credit and high-yield6 (HY) corporate bonds - can help build a resilient and diversified portfolio.

    Investors should consider how they allocate to each fixed income market segment as the difference in drivers of return, sensitivity to interest rate movements and corporate fundamentals will affect returns. Having the flexibility to move between sectors may be advantageous.

    2. Actively managing duration7

    In fixed income investing, duration is a gauge of interest rate risk, showing how bond prices and yields will likely change when rates move. Generally, longer duration bonds may suffer more price decline in response to a rise in interest rate. Therefore, duration positioning has served both as a risk management8 tool as well as a source of alpha.

    We prefer high quality, short-duration bonds. We believe government bonds can be a place to add duration. Yields on 10-year US Treasuries more than doubled this year, as of 8 June 2022, and should offer some flight-to-quality benefits at a yield above 3%9. If Fed expectations shift to a higher terminal rate, we believe the front-end of the Treasury market would absorb most of the repricing, with the back-end remaining stable.


    FIXED INCOME CAPABILITIES

    Proprietary research Risk management Team approach
    Proprietary research

    Our research encompasses fundamental, quantitative and technical analysis

    Provided for illustration only, not to be construed as offer, research or investment advice. As of 31.03.2022.

    Risk management

    Our risk management discipline is essential to our investment process.

    The portfolio risk management process includes an effort to monitor and manage risk, but does not imply low risk. The manager seeks to achieve the stated objective. There can be no guarantee the objective will be met. Forecasts, projections and other forward looking statements are based upon current beliefs and expectations, may or may not come to pass. They are for illustrative purposes only and serve as an indication of what may occur. Given the inherent uncertainties and risks associated with forecast, projections or other forward statements, actual events, results or performance may differ materially from those reflected or contemplated. As of 31.03.2022.

    Team approach

    * Includes portfolio managers, research analysts, traders and investment specialists with VP title and above.
    ^ Due to rounding, data may not always add up to the total AUM. AUM figures are representative of assets managed by the Global Fixed Income, Currency & Commodities group and include AUM managed on behalf of other J.P. Morgan Asset Management investment teams. The manager seeks to achieve the above stated objective. There can be no guarantee the objective will be met.
    Source: J.P. Morgan Asset Management, as of 31.03.2022.

    Provided for information only based on market conditions as of date of publication, not to be construed as investment recommendation or advice. The manager seeks to achieve the stated objectives. There can be no guarantee the objectives will be met.
    Diversification does not guarantee investment return and does not eliminate the risk of loss.
    1. For illustrative purposes only based on current market conditions, subject to change from time to time. Not all investments are suitable for all investors. Exact allocation of portfolio depends on each individual’s circumstance and market conditions.
    3. Source: Consumer Price Index, Australia, Key Statistics, Australian Bureau of Statistics, 27.04.2022.
    4. Source: “Statement by Philip Lowe, Governor: Monetary Policy Decision”, Reserve Bank of Australia, 07.06.2022.
    5. Securitisation is the process in which certain type of assets, such as mortgages or other types of loans, are pooled so that they can be repackaged into interest-bearing securities. Examples of securitised debt include asset-backed securities and mortgage-backed securities.
    6. High-yield credit refers to corporate bonds which are given ratings below investment grade and are deemed to have a higher risk of default. Yield is not guaranteed. Positive yield does not imply positive return.
    7. Duration is a measure of the sensitivity of the price (the value of the principal) of a fixed income investment to a change in interest rates and is expressed as number of years.
    8. The portfolio risk management process includes an effort to monitor and manage risk, but does not imply low risk.
    9. Source: J.P. Morgan Asset Management, “Global Fixed Income Views 3Q 2022”, 13.06.2022.

    TIMELY MARKET INSIGHTS

    Empower better fixed income decisions with our insights and resources.

    Weekly Bond Bulletin

    Each week J.P. Morgan Asset Management's Global Fixed Income, Currency and Commodities group reviews key issues for bond investors through the lens of its common Fundamental, Quantitative Valuation and Technical (FQT) research framework.

    Read more

    Global Fixed Income Blog

    Perspectives from our Global Fixed Income, Currency & Commodities Group

    Read more

    Global Fixed Income Views

    Themes and implications from the Global Fixed Income, Currency & Commodities Investment Quarterly meeting.

    Read more

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    ACTIONABLE INVESTMENT IDEAS

    Portfolio Q&A: Income Fund

    Flexibility is at the heart of our approach to fixed income markets.

    Read more

    Seeking opportunities through call options in active ETFs (2)

    We share our insights on optimising call options in equity income ETFs.

    Read more

    Seeking opportunities through call options in active ETFs (1)

    We share the basics of call options in equity income ETFs.

    Read more

    Positioning for income as silver linings emerge

    Income investing can help tap investment opportunities while managing volatility through cash flows from a diversified portfolio of income generating assets.

    Read more

    Are bonds back as inflation hits the high notes?

    We share our views on the fixed income themes and opportunities in current choppy markets.

    Read more

    New Pathways to Income: Optionality

    Combining disciplined call-writing with an active low volatility equity portfolio can provide institutional investors with a new and diversifying source of income.

    Read more

    Active bond investing as the world lives with inflation

    We share our views on the fixed income opportunities in the current tough times.

    Read more

    At a crossroads as rates rise? Here’s what a bond indicator is telling us

    Rising government bond yields have presented more room to manage the impact of rate hikes. How big is this leeway?

    Read more

    Navigating income opportunities in volatile times

    Income investing remains relevant in the current market environment, as volatility is poised to remain elevated.

    Read more

    How do we manage quality, income & risk in a bond portfolio?

    We believe that quality and yield opportunities can still be found in bonds.

    Read more

    Do you know how we report on climate-related risks & opportunities?

    We share how we consider the risks and opportunities in climate change investing.

    Read more

    Optimising flexible fixed income as inflation bites

    Going across the full spectrum of fixed income to navigate an inflationary environment.

    Read more

    Securitisation: Then and now

    The securitisation market has regained much ground in the past decade.

    Read more

    Securitisation 101: What are ABS and MBS?

    Fixed income isn’t just government or corporate bonds, it also includes non-traditional debt securities.

    Read more

    CONTACT US

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    For more information, please call or email us. You can also contact your J.P. Morgan representative.

    1800 576 100 (Application enquiries)

    1800 576 468 (General enquiries)

    jpmorgan.funds.au@jpmorgan.com

    JPMorgan Asset Management

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    All investments contain risk and may lose value. This advertisement or publication has been prepared and issued by JPMorgan Asset Management (Australia) Limited (ABN 55 143 832 080) (AFSL No. 376919) being the investment manager of the fund. It is for general information only, without taking into account your objectives, financial situation or needs and does not constitute personal financial advice. Before making any decision, it is important for you to consider the appropriateness of the information and seek appropriate legal, tax, and other professional advice. Prior to making an investment decision, investors should read the relevant Product Disclosure Statement and Target Market Determination, which have been issued by Perpetual Trust Services Limited, ABN 48 000 142 049, AFSL 236648, as the responsible entity of the fund available on https://am.jpmorgan.com/au.