Capturing the potential of the future world as we live smarter in the city

Important information
JPMorgan Future Transition Multi-Asset Fund
The Fund invests primarily (i.e. at least 70% of its total net asset value) in debt and equity securities (directly or indirectly through collective investment schemes) whose issuers may benefit from, or contribute to, the transition towards the future world. The Fund will have limited Renminbi (RMB) denominated underlying investments. The Fund is therefore exposed to a range of investment related risks which includes risks associated with the Fund’s investment strategy (including risks associated with future transition concept, its sub-themes and changing market trends, risks associated with concentration in a single theme and/or sub-theme and risks associated with the use of big data and artificial intelligence technique), dynamic asset allocation strategy, debt securities (including downgrading risk, below investment grade/ unrated investment risk, credit risk, interest rate risk, valuation risk, volatility and liquidity risk), equity, emerging markets, investing in other collective investment schemes, concentration, currency, derivatives, liquidity, hedging, class currency and currency hedged classes. In addition, RMB hedged classes expose to 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. 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. Also, a positive distribution yield does not imply a positive return on the total investment. The distribution amount and net asset value per unit of a currency hedged class may be adversely affected by differences in the interest rates of the reference currency of the relevant currency hedged class and the Fund’s base currency, resulting in an increase in the amount of distribution that is paid out of capital and hence a greater erosion of capital than other classes of units. Investors may be subject to substantial losses. Investors should not solely rely on this document to make any investment decision.

Key takeaways:

Advances in technologies such as artificial intelligence (AI), robotics and the Internet of Things (IoT) are accelerating efficiencies in urban policy and paving the way for transformative changes to our everyday life in the city.

Companies harnessing smart technologies to improve the efficiency, productivity and functionality of smart city living are presenting long-term investment opportunities¹.

A walk in a smart city

Significant growth opportunity lies ahead as over 150 cities² around the world have officially adopted a ‘smart city’ strategy, tapping into technological innovation to make cities more efficient.

Smart solutions are not limited to installing digital interfaces in traditional infrastructure or streamlining city operations. It is also about using technology and data purposefully to make better decisions and to help improve the quality of life. And companies that are harnessing such smart technologies present long-term investment opportunities¹.

Cooling systems in a smart city

Centralised smart cooling systems could bring a new way of life to cities near the tropics.

Such smart cooling systems harness chilled water that is generated from highly energy-efficient chiller plants to produce cool air for homes and buildings³.

Government investments to upgrade city infrastructure present opportunities for companies to innovate and provide the leading-edge technologies for such systems. For example, some companies have continued to develop integrated solutions that can transform visually more comfortable smart lighting systems into a platform for data-driven applications. Powered by human-traffic sensors, these lighting systems know how to switch off automatically when public spaces are unoccupied, translating into energy- and cost-savings for a smart city⁴.

No more ‘jams’ in the city?

Traffic congestion is generally a major issue in most cities around the world, with increased use of vehicles on the roads. Still, smart technologies have started to transform the way people move around in cities.

Take Singapore as an example, real-time traffic data on bus arrivals, taxi availability, traffic conditions and carpark spaces are shared with residents to help manage, or even avoid traffic congestions.

Crowding issues on buses have been reduced by 92%⁵. Going forward, Singapore is also looking to adjust traffic light timings and provide traffic light priority for buses, allowing shortened wait and travel times.

Continuing advancements of autonomous driving technology are making good progress in improving the safety of semi-autonomous vehicles on the roads. Sensor technologies or advanced driver assistance systems enable the digitalisation of information for control and communication, and allow the automation of certain functions. For example, adoptive cruise control, parking assist and fatigue recognition are becoming more common fixtures in motor vehicles.

We expect mass market adoption of autonomous vehicles could markedly improve road safety and reduce traffic congestion and carbon dioxide emissions, enhancing the quality of lives of many.

How we are harnessing AI in our asset allocation strategy¹

Financial professionals and investors have generally referenced regulatory filings, company profiles, reseach reports and news reports in their research process. Using natural language processing, our innovative and proprietary ThemeBot AI tool⁶ helps our investment professionals rapidly analyse hundreds of millions of data sources as well as screen more than 10,000 stocks globally.

ThemeBot is a key AI tool that enables JPMorgan Future Transition Multi-Asset Fund to seek out opportunities in evolving future transition trends. ThemeBot helps identify smaller, early stage opportunities as we build thematic investment strategies.

The tool uses textual relevance and revenue attribution to generate a list of stocks associated with a theme. Its output is then validated and refined by our team of experienced investment professionals – combining artificial and human intelligence for stronger outcomes.

Key highlights of the Fund⁶

Conclusion

AI, robotics and IoT are bringing rapid changes in smart cities and more governments are adopting new technologies to improve urban planning, and achieve a more sustainable living environment. Companies tapping into technological innovation that helps make cities more effective and efficient are presented with long-term growth opportunities¹.

This content represents our investment team’s current view and overall strategy provided for information only based on current market conditions not taking into consideration any specific investor’s investment objective and risk appetite. Not to be construed as investment recommendation or advice.

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.
2. Source: Roland Berger “Smart City Index: Vienna and London lead the worldwide ranking”, 08.03.2019.
3. Source: “Fresh Water Cooling Tower Scheme”, Electrical and Mechanical Services Department, Hong Kong, 01.05.2021.
4. Source: “Smarter and More Energy-Efficient Street Lighting Systems by 2022”, Land Transport Authority Singapore, 03.01.2017.
5. Source: “Open Data & Analytics for Urban Transportation”, Smart Nation and Digital Government Office, Singapore. Data as of 31.05.2021.
6. Source: J.P. Morgan Asset Management, July 2021.

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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