Seeking opportunities through call options in active ETFs (2)
We share our insights on optimising call options in equity income ETFs.
With inflation starting to cool and growing signs that global central banks are approaching the end of their hiking cycles, bonds are presenting income and diversification opportunities.1
As illustrated2 below, government bond yields are rising to decade highs and valuations are in general, relatively compelling. Fixed income is resuming its traditional role in portfolios while managing risk3.
2. Source: J.P. Morgan Asset Management; (LHS) FactSet, Tullett Prebon; data as of 30.06.2023. (RHS) Bloomberg, J.P. Morgan Asset Management, data as of 31.05.2023. Chart indicates the calculated total return achieved by purchasing US Treasuries at the current yield and selling at the end of 2023 given various changes in yield. Past performance is not a reliable indicator of current and future results. This information is provided for illustrative purposes only to demonstrate macro trends, not to be construed as offer, research, investment recommendation or advice. Forecasts/Estimates may or may not come to pass.
For some bond strategies, we employ a flexible, global fixed income investment approach that can help investors, depending on their investment objectives and risk appetite, capture income opportunities as bond markets recover, while managing uncertainties such as the path of interest rates and inflation.
Without a benchmark as a starting point and free from bias to any region or sector, such an approach allows investors to explore all avenues to seek total return, income and volatility management, with investment managers dynamically adjusting asset allocation and duration4 as market conditions evolve.
At J.P. Morgan Asset Management, our cross-sector expertise and deep research resources enable us to invest across the global bond universe, building dynamic fixed income portfolios for a range of risk appetites and goals. Our disciplined investment process combines top-down and bottom-up analysis, with a common research framework to integrate ideas.
Leverages a broad global platform of 300+ fixed income investment professionals in five locations5 to identify high-conviction ideas across multiple fixed income sectors.
Experienced portfolio managers set and dynamically adjust asset allocation and duration4 as market conditions evolve.
With no benchmark as a starting point, we take a holistic and rigorous approach to risk3.
J.P. Morgan Asset Management presents fixed income solutions that spans the risk spectrum, underpinned by the deep resources and rigorous research of a truly global platform5.
5. Source: J.P. Morgan Asset Management, data as of 31.12.2023. Includes portfolio managers, research analysts, traders and investment specialists with VP title and above.
JPMorgan Income ETF (JPIE) is the marketing name for JPMorgan Income Active ETF (Managed Fund). JPMorgan Global Bond Fund is the marketing name for JPMorgan Global Bond Fund – Class A Units.
Provided for information only based on market conditions as of date of publication, not to be construed as offer, research, investment recommendation or advice. 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.
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The Zenith Investment Partners (ABN 27 103 132 672, AFS Licence 226872) (“Zenith”) rating (assigned March 2024 for PER0716AU, PER0727AU and PER6912AU) referred to in this piece is limited to “General Advice” (s766B Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual, including target markets of financial products, where applicable, and is subject to change at any time without prior notice. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Past performance is not an indication of future performance. Zenith usually charges the product issuer, fund manager or related party to conduct Product Assessments. Full details regarding Zenith’s methodology, ratings definitions and regulatory compliance are available on our Product Assessments and at Fund Research Regulatory Guidelines (https://www.zenithpartners.com.au/our-solutions/investment-research/regulatory-guidelines).
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, and are not to be construed as offer, research or investment advice. Not all investments are suitable for all investors. Exact allocation of portfolio depends on each individual’s circumstance and market conditions.
3. Risk management does not imply elimination of risks. Provided to illustrate the investment process. Dividend or returns are not guaranteed. Please refer to offering documents for details on distribution policy.
4. 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.
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Future performance and return of capital is not guaranteed. Information is considered correct at the time of issue but no liability for errors or omissions will be accepted by JPMorgan Asset Management (Australia) Limited or its affiliates. ETFs have fees that reduce their performance, indexes do not. Dividends or returns are not guaranteed. Please refer to offering documents for details on distribution policy.
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