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  4. Chinese bonds: what, why and how

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 Important information
 JPMorgan Funds – China Bond Opportunities Fund
  1. The Fund invests primarily in onshore CNY-denominated debt securities and offshore CNH- or USD-denominated debt securities issued by Chinese issuers.
  2. The Fund is therefore exposed to currency risk, the risks associated with debt securities (e.g. interest rate, downgrade, below investment grade/unrated, investment grade, sovereign debt, valuation, credit rating, credit, volatility and liquidity risks), emerging markets, concentration, active currency position, derivatives, PRC market, RMB currency, “Dim Sum” bond, China interbank bond market (“CIBM”), PRC tax and contingent convertible securities risks. For currency hedged share classes, the currency hedging process may not give a precise hedge and there is no guarantee that the hedging will be totally successful. For “(irc)” share classes, they may have greater capital erosion, and their NAV may fluctuate more and be significantly different to the other share classes. Investment in RMB hedged share class is subject to risks associated with the RMB currency and currency hedged share 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.
  3. The Fund may at its discretion pay dividends out of capital, giving priority to dividends rather than capital growth. The Fund may also at its discretion pay dividends out of gross income while charging all or part of the Fund's fees and expenses to the capital of the Fund, resulting in an increase in distributable amount for the payment of dividends and therefore, effectively paying dividends out of realised, unrealised capital gains or capital. Investors should note that, share classes of the Fund which pay dividends may distribute not only investment income, but also realised and unrealised capital gains or capital. Payment of dividends out of capital amounts to a return or withdrawal of part of an investor's original investment or from any capital gains attributable to that original investment. Any dividend payments, irrespective of whether such payment is made up or effectively made up out of income, realised and unrealised capital gain or capital, may result in an immediate reduction of the net asset value per share.
  4. Investors may be subject to substantial losses.
  5. Investors should not solely rely on this document to make any investment decision.

Chinese bonds: what, why and how

Jul 2020 (3-minute read)

.P. Morgan Asset Management

Key takeaways:

  • With developed markets embracing zero interest rates again, yield seekers are gradually shifting their focus to the Chinese bond market. We feature the attractive income potential of the world’s second largest bond market1 below.

 

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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.

1. Source: J.P. Morgan Asset Management, Bank for International Settlements (BIS). Market size data as of 30.06.2020. Government bond yields data as of 30.06.2020.
2. Diversification does not guarantee investment return and does not eliminate the risk of loss.
3. Source: J.P. Morgan Asset Management, Bloomberg, USD return, data from 31.12.2004 to 31.03.2020. Equities: SSE Composite Index (Shanghai A-Shares), S&P 500 Index (US Equities). Developed market bonds: J.P. Morgan Asia Diversified Index (Japan, Australia), J.P. Morgan Government Bond Index (United Kingdom, France, Italy, Germany). Past performance is not indicative of future performance. Investors should note that different asset classes have varying risk/return profiles. Indices may not include fees or operating expenses and are not available for actual investment.
4. Indices may not include fees or operating expenses and are not available for actual investment.
5. Source: Wind, ADB Research, JP Morgan. Data as of 30.09.2019.
6. Yield is not guaranteed. Positive yield does not imply positive return.
7. Source: J.P. Morgan, S&P, data of J.P. Morgan Asia Credit Index as of 30.06.2020. Yield is not guaranteed. Positive yield does not imply positive return.
8. Source: J.P. Morgan Asset Management, Moody’s, S&P, Fitch, as of 31.05.2020. The credit rating is based on the highest of Moody’s, S&P and Fitch. Average rating is the weighted average of the credit ratings of bond holdings (including non-rated bonds) and net liquidity.
9. Source: J.P. Morgan Asset Management. Ex-dividend date of the USD (mth) Class is 09.06.2020. The USD (mth) Class aims at monthly distribution. Dividend rate is not guaranteed. Distributions may be paid from capital. Refer 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.
10. Provided for information only, not to be construed as investment or research recommendation. Holdings and exposures in actively managed portfolios are subject to change from time to time.

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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