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  4. It’s three-in-a-row: Asian bonds in a portfolio

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 Important information
 JPMorgan Asian Total Return Bond Fund
  1. The Fund invests primarily (at least 70%) in Asian bonds and other debt securities. The Fund will have limited RMB denominated underlying investments.
  2. The Fund is exposed to risks related to debt securities (including interest rate risk, below investment grade/ unrated investment risk, investment grade bond risk, sovereign debt risk, valuation risk, credit risk and credit rating agency risk) emerging markets, concentration, currency, derivatives, liquidity, hedging, class currency and currency hedged classes. Pertaining to investments in below investment grade or unrated debt securities, these securities may be subject to higher liquidity risks and credit risks comparing with investment grade bonds, with an increased risk of loss of investment. For RMB hedged class, risks associated with the RMB currency and currency hedged classes risks. RMB is currently not freely convertible and RMB convertibility from offshore RMB (CNH) to onshore RMB (CNY) is a managed currency process subject to foreign exchange control policies of and restrictions imposed by the Chinese government. There can be no assurance that RMB will not be subject to devaluation at some point. The Manager may, under extreme market conditions when there is not sufficient RMB for currency conversion and with the approval of the Trustee, pay redemption monies and/or distributions in USD.
  3. Where the income generated by the Fund is insufficient to pay a distribution as the Fund declares, the Manager may at its discretion determine such distributions may be paid from capital including realised and unrealised capital gains. Investors should note that the payment of distributions out of capital represents a return or withdrawal of part of the amount they originally invested or from any capital gains attributable to that original investment. Any payments of distributions by the Fund may result in an immediate decrease in the net asset value per unit.
  4. Investors may be subject to substantial losses.
  5. Investors should not solely rely on this document to make any investment decision.

It’s three-in-a-row: Asian bonds in a portfolio

Aug 2020 (3-minute read)

J.P. Morgan Asset Management

Key takeaways:

  • Just like getting three-in-a-row, Asia's bond markets continue to show income1 potential supported by three competitive factors:
    • Easing policies
    • Competitive income potential
    • Relatively mild inflation supports further easing
  • A flexible strategy2 can help capture compelling income1 opportunities by investing across the US dollar (USD) and local currency bond markets, alongside diverse allocations in various types of bonds, such as corporate, government and convertible.

 

 

1st competitive factor: easing policies3


The public health crisis has disrupted economic activities globally, and governments and central banks have continued to respond with massive monetary and fiscal stimulus to support businesses and labour markets. As easing polices are here to stay, policy rates will be lower for longer, bolstering Asia’s bond markets. 

 2nd competitive factor: compelling income potential

 

  • Government bond yields are trending lower as global central banks have cut interest rates to zero or negative levels.
  • Asia’s bond markets, when compared with other global bonds, could generally offer attractive potential for yield, especially the higher-yielding local currency debt.
     

Government bond yields across Asia and major developed markets4

 

 3rd competitive factor: relatively mild inflation supports further easing

 

  • Inflation has generally been moderate in Asia, giving the region’s central banks and governments more room for easing policies.
  • Economic activities have gradually resumed in Asia. Fiscal stimulus could also help maintain supply and keep prices relatively stable.
     

Consumer Price Index and Producer Price Index inflation5


 

 

How to seek yields in Asia’s bond markets?

JPMorgan Asian Total Return Bond Fund navigates through the evolving fixed income markets, tapping the broad spectrum of Asian bond sectors for compelling income opportunities1.


Attractive income opportunities1


The Fund offers monthly distribution “(mth)” share classes*, providing attractive income opportunities. In addition, the Fund is available in USD and HKD Classes, alongside Hedged Classes in AUD, CAD, NZD, RMB and GBP, to help meet investors’ need for different currencies. (*Aim at monthly distribution. Dividend rate is not guaranteed. Distributions may be paid from capital. Refer to important information 3)


Historical distributions6

 

Other characteristics of the Fund:

 

A flexible Asian bond strategy

The Fund is benchmark-agnostic and invests flexibly in fixed income sectors such as USD-denominated Asian credit, local currency bonds and convertible bonds, striving for competitive total returns.


Actively managed portfolio

The exposure to multiple sectors within Asia helps the Fund optimise the unique characteristics of the Asian fixed income spectrum for potential returns. The investment team actively manages currency exposures and durations, taking a strategic approach to manage risk while seeking opportunities.

 


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1. Yield is not guaranteed. Positive yield does not imply positive return.
2. 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. Yield is not guaranteed. Positive yield does not imply positive return.
3. Source: J.P. Morgan Asset Management and Central Banks (China, South Korea, Indonesia and India). Data as of 29.06.2020. China’s policy rate refers to Medium-Term Loan Facility Rate.
4. Source: Bloomberg, as of end-June 2020. Yield is not guaranteed. Positive yield does not imply positive return. Past performance is not a reliable indicator of current and future results.
5. Source: CEIC, National Bureau of Statistics of China, J.P. Morgan Asset Management. Data reflect most recently available as of 30.06.2020.
6. Source: J.P. Morgan Asset Management. Ex-dividend date is 30.06.2020. The (mth) Class aims at monthly distribution. Dividend rate is not guaranteed. Distributions may be paid from capitalRefer to important information 3. 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.

Provided for information only based on market conditions as of date of publication, not to be construed as investment recommendation or advice. Forecasts/ estimates may or may not come to pass.

Investment involves risk. Not all investments are suitable for all investors. Past performance is not a reliable indicator of current and future results. Please refer to the offering document(s) for details, including the risk factors. Investors should consult professional advice before investing. Investments are not similar to or comparable with fixed deposits. The opinions and views expressed here are as of the date of this publication, which are subject to change and are not to be taken as or construed as investment advice. Estimates, assumptions and projections are provided for information only and may or may not come to pass. This document has not been reviewed by the SFC. Issued by JPMorgan Funds (Asia) Limited.

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Investment involves risk. Past performance is not indicative of future performance. In particular, funds which are invested in emerging markets and smaller companies may involve a higher degree of risk and are usually more sensitive to price movements. Investors should carefully read and consider the fund offering document(s), which contain details on investment objectives, risk factors, charges and expenses of the fund, before making any investment decisions. Information in this website does not constitute investment advice, or an offer to sell, or a solicitation of an offer to buy any security, investment product or service, nor a distribution of information for any such purpose. Informational sources are considered reliable but you should conduct your own verification of information contained herein. The above information has not been reviewed by the SFC, issued by JPMorgan Funds (Asia) Limited.

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