Chinese bonds: what, why and how

Important information
JPMorgan Funds – China Bond Opportunities Fund
The Fund invests primarily in onshore CNY-denominated debt securities and offshore CNH- or USD-denominated debt securities issued by Chinese issuers. 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. 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. Investors may be subject to substantial losses. Investors should not solely rely on this document to make any investment decision.

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.

Click here for more fund information

Find out how we Manage Volatility

Click here to explore more Investment Ideas

Subscribe to our e-Newsletter

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.

OUR FOCUS FUNDS

See all funds

Recovering economy, recovering Chinese property bond demand

As China’s property market recovers, capture income potential of Chinese property bonds with a diversified Asian bond strategy.

Is the Fed’s new framework a boon for Asia?

With the Fed’s new policy framework, where do we see opportunities in Asia?

Activating Asia’s bond potential with a dynamic approach

Actively manage local currency opportunities in an Asian bond portfolio.

What a weak US dollar could mean for a portfolio

Seeking investment opportunities as the US dollar weakens.

Asia’s bond markets = one region + multiple income options

Asia’s bond markets have grown significantly over the past decade, spanning a diverse range that offers investors more fixed income options.

Seeking quality growth potential in China A-Shares

Our portfolio manager shares her views on potential quality growth and A-Shares as China enters a new normal.

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

Income opportunties can still be found in Asia’s bond markets amid low rates as they are supported by these three factors.

Asian bonds: there’s still more to know

The Asian bond market has grown significantly in the past decade. Explore the abundant opportunities.

Growth in focus: finding the ace among A-Shares

Amid China’s long-term structural growth trends, which are the sectors that could stand out in the A-Share market?

3, 2, 1 – getting ready to invest in Chinese bonds

Expand your sources of income by considering the potential opportunities in Chinese bonds.

Unlocking long-term growth potential in Asia

Structural growth trends in Asia remain intact amid the pandemic and some have actually been accelerated.

Navigating Chinese bonds with versatility

As the search for income gets tougher, consider the world of Chinese bonds to diversify your income opportunity set.

Riding through the highs and lows with global dividend opportunities

Striving to optimise potential equity income opportunities as markets recover.

Scenarios of an expected global economic recovery

We describe three case scenarios for economic recovery after the pandemic subsides.

Making the most of bond opportunities as the pandemic subsides

Positioning to tap bond market opportunities as economies reboot as the pandemic subsides.

Positioning for yield in time for a global restart

As liquidity conditions improved, our portfolio manager shares how we are positioned for income opportunities across asset classes.

Emerging trends set in motion for US technology

US technology sector looks set to benefit from emerging trends driven by the pandemic.

Income Strategy Q&A: focusing on long-term value proposition

Our income strategy portfolio manager shares how he looks through the headlines and focuses on the long term.

China Q&A: finding quality A-shares in volatile markets

China’s long-term structural trends such as consumption upgrades, domestic technology and healthcare innovation are expected to remain intact amid the pandemic.

Multi-asset income strategies in unique times

As the search for quality income gets challenging, a diversified multi-asset income solution could be considered to broaden income potential.

2Q 2020 bonds: weathering a market storm

Diversifying across fixed income, with a quality tilt, could help build portfolio resilience.

Taking steps to stay on top of volatility

A diversified portfolio with a defensive bias could help build portfolio resilience while seeking yield opportunities.

Focus Q&A: how tech stocks in APAC are faring

The limited impact of COVID-19 on APAC’s technology industry chain in the medium to long term.

Adding a fitting pace to your income portfolio

Diversify your income sources to help navigate uncertain markets.

Fixed income investing in uncertain times

Investing across multiple fixed income sectors could help navigate uncertain markets and seek yield in fixed income.

Repositioning for income potential in uncertain times

Our multi-asset fund manager shares how he repositions for income in uncertain times.

Some investing dos and don’ts when markets are volatile

Some investing ‘dos & don’ts’ as you navigate market volatility in uncertain times.

Investing during the COVID-19 outbreak: 4 topmost concerns

As COVID-19 continues to evolve, our strategists share 4 topmost concerns among Asia’s investors.

China’s fundamentals signal resilience despite health crisis

China’s economic fundamentals remain resilient as the country races to contain an evolving health crisis.

The little red envelope savings guide

As you welcome the Year of the Rat, plan to make your “lucky money” work harder for you.

Aiming high when yield stays low

Yield can still be found in a low rate environment but requires moving along the risk spectrum.

1Q 2020 bonds: where we see opportunities

Time to reposition fixed income as the economy bottoms out and recession risk wanes.

Investing in a world of ultra-low rates

Lower returns from bonds could pose a challenge to long-term investors.

Keeping F.I.T. in mind as you invest in 2020

Keep F.I.T. when walking the economic tightrope in 2020.

Diversify & dynamic: an income investing duo

A flexible income strategy could help seek yield while managing risks in uncertain markets.

Inside a portfolio: ABS, MBS in 4 minutes

Securitised debt could help diversify income sources and risks in multi-asset portfolios.

Make equities a partner in your multi-asset journey

How equities could still play a role in your multi-income portfolio.

The key to bond investing in 4Q 2019

Our 4Q 2019 high conviction bond ideas favour moving up in quality to build resilience.

Go ‘West’ in the search for quality high yield

Move towards quality fixed income for more resilience in a multi-income portfolio.

4Q 2019 market outlook in 3 charts

Yield can still be found in a low rate, low inflation and low yield environment.

Chasing yield during the trade turmoil

How can investors keep a balanced risk and return profile amid geopolitical volatilities?

The A.B.C. of multi-asset income investing

Learn the A.B.C. in multi-asset income investing to add resilience to your portfolio.

Securitisation 101: What are ABS and MBS?

Fixed income isn’t just government or corporate bonds, it also includes non-traditional debt securities.

Securitisation: Then and now

The securitisation market has regained much ground in the past decade.

The secret to effective diversification

Diversification sounds easy, but how to do it effectively?

Article Tags: Volatility Market Views Fixed Income

Feel free to call our InvestorLine or email us if you would like further information about our Funds or eTrading services:

(852) 2265 1188

investor.services@jpmorgan.com

Fund Listing

Featured Funds

Market Insights

Retirement Insights

Knowing the Basics

Getting Started

Key takeaways:

Find out how we Manage Volatility

Click here to explore more Investment Ideas

OUR FOCUS FUNDS

Fixed Income

Asset Allocation

Equity