A multi-income journey into the emerging high-yield potential
Income investors like us have stayed the course as we ride through the four seasons. Where do we see income opportunities?
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Which is why the JPMorgan Multi Income Fund invests dynamically across asset classes globally, striving for attractive income and capital growth potential in changing markets through an impressive decade.
What are on the cards investing in 2021?
CHALLENGE
A prolonged period of ultra-low rates
Accommodative monetary policy has provided support to the economy, but a growing number of negative-yielding government bonds in developed markets and relatively high equity prices may not provide significant upside potential. In this environment, it may be tougher for investors to find attractive income from traditional sources.
OPPORTUNITY
Broaden sources for consistent income
Opportunities for consistent income can be found by moving across regions, asset classes and the full capital structure, identifying income sources beyond traditional assets to explore the diverse income universe.
Yield of different asset classes
EM: emerging market. HY: high yield. IG: investment grade. Source: Bloomberg, J.P. Morgan Asset Management, as of 30.09.2020. Yield = book yield. Data used: MSCI World Index (Global Equities), MSCI World High Dividend Index (Global Equities (High Div)), Bloomberg Barclays US Corporate High Yield 2% Constrained Index (US HY), J.P. Morgan EMBI Global Diversified Index (EM Debt), Bloomberg Barclays US IG Credit Index (US IG Credit), Bloomberg Barclays US Aggregate Index (US Aggregate Bonds), US 10-year Treasury (US 10-Year), German 10-year Treasury Index (German 10-Year), Average annual percentage rate on money market account of Bankrate.com (USD Cash). Yield is not guaranteed. Positive yield does not imply positive return.
CHALLENGE
Volatility may heighten amid uncertainties
2021 seems to see more clarity after a year characterised by politico-economic changes and pandemic. The direction and magnitude of future economic growth will largely depend on how the pandemic could play out. It is still unknown when a vaccine could be launched and become widely available, or whether there could be an exponential rise in infections, adding to volatility in the markets. Still, investors may risk missing out on investment opportunities should they choose to stay on the sidelines in uncertain markets.
OPPORTUNITY
Seek a balanced risk and return profile
Different assets perform differently under various market conditions. In order to generate returns in volatile markets, it is crucial that investors adopt a diversified approach, depending on their risk appetite, capturing opportunities from different asset classes to help achieve a balanced risk and return profile.
Returns and volatility of different asset classes
AxJ: Asia ex-Japan. APxJ: Asia Pacific ex-Japan. DM: developed market. HD: high dividend. REITs: real estate investment trusts. Source: Bloomberg Finance L.P., Dow Jones, FactSet, MSCI, Standard & Poor’s, J.P. Morgan Asset Management. Calculated using monthly total return in USD between 30.09.2005 and 30.09.2020, based on MSCI Total Return, Bloomberg Barclays and J.P. Morgan indices. Past performance is not indicative of future performance.
JPMORGAN MULTI INCOME FUND: OPTIMISING A MULTI-ASSET STRATEGY
Proven results: return and income
The Fund has delivered proven results entering the first decade since its inception:
USD (mth) Class* has achieved since launch
Cumulative return of 75.1%
Annualised yield of 4.3%
or above
*Aim at monthly distribution. Dividend rate is not guaranteed. Distributions maybe paid from capital. Refer to important information 3
Source: J.P. Morgan Asset Management, from launch on 09.09.2011 to 31.12.2020, NAV to NAV in USD with income reinvested. Calendar year return: 2016 +7.4%; 2017 +10.6%; 2018 -5.0%; 2019 +14.8%; 2020 +4.7%. Past performance is not indicative of future performance. Positive distribution yield does not imply positive return. Annualised yield = [(1+distribution per unit/ex-dividend NAV)^12]-1. The annualised dividend yield is calculated based on the monthly dividend distribution with dividend reinvested, and may be higher or lower than the actual annual dividend yield.
Award-winning fund manager
Leon Goldfeld, who co-manages the Fund, was named Fund Manager of the Year – Mixed Asset at The Asset Triple A Asset Servicing, Institutional Investor and Insurance Awards 2019 for his outstanding management of various funds.
Issued by The Asset, 2019 award, reflecting performance of previous calendar year.
There can be no assurance that the professionals currently employed by J.P. Morgan Asset Management (JPMAM) will continue to be employed by JPMAM or that the past performance or success of any such professional serves as an indicator of such professional's future performance or success.
Dynamic asset allocation
The ability to dynamically respond to changing market conditions is key to delivering capital growth. Our fund managers have the flexibility to dynamically allocate their highest conviction ideas across geographies, asset classes and capital structure into the Fund’s portfolio.
Diversified income sources
With an aim to maximise income return through a diversified portfolio, the Fund is designed to capture income potential from a broad range of asset classes. Its monthly distribution share classes* provide investors with attractive income opportunities.
*Aim at monthly distribution. Dividend rate is not guaranteed. Distributions maybe paid from capital. Refer to important information 3
Asset allocation since launch
Source: J.P. Morgan Asset Management as of 31 December 2020. The fund is an actively managed portfolio. Holdings, sector weights, allocations and leverage, as applicable, are subject to change at the discretion of the investment manager without notice.
Latest Strategy Highlights
Equities
• High dividend equities
- Compelling valuations vs. traditional growth stocks
- Corporate earnings improved globally
Emerging market (EM) equities
- Constructive backdrop from the weakening USD
- Attractive growth potential as EM Asia leads the global recovery
Fixed Income
High yield bonds
- Appealing return potential with credit spread still above pre-pandemic levels
- A potentially lower-beta alternative to additional equity exposure with attractive yield opportunities
Securitised
- Potential diversifier to other credit allocations
- Greater resilience during periods of equity drawdowns
Hybrid
Preferred equities
- Generally higher in the capital structure compared with common stocks
- Supported by the higher cash reserves and healthier balance sheets of US and European banks, which make the majority of preferred equities
Source: J.P. Morgan Asset Management, as of end-November 2020.
Multi-asset income experts: J.P. Morgan Asset Management’s Multi-Asset Solutions Team
Source: J.P. Morgan Asset Management, as of end-September 2020. Includes portfolio managers, research analysts, traders and investment specialists with VP title and above.
Diversification does not guarantee investment returns and does not eliminate the risk of loss. Indices do not include fees or operating expenses and are not available for actual investment. Forecasts, projections and other forward looking statements are based upon current beliefs and expectations. 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. 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 circumstances and market conditions.