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.
The struggle to generate income is likely to intensify as major central banks around the globe have pushed policy rates to zero or even negative. Central banks are also engaging in asset purchases, keeping bond yields low. So where could investors turn to for income opportunities?
As the world’s second largest bond market1, the Chinese bond market offers different income opportunities but may have been overlooked by some investors.
3 reasons for investing in Chinese bonds
A market with rising demand
A potential diversifier
An income source with potential
1 strategy in focus
Not limited by any benchmark, JPMorgan Funds – China Bond Opportunities Fund invests flexibly across the onshore and offshore Chinese bond markets. The Fund may include bonds and debt securities issued by governments and their agencies, financial institutions as well as corporates to capture the diverse opportunities in varying market conditions.
Focus on flexibility and quality
Benchmark-agnostic, the Fund invests flexibly across the onshore and offshore CNY-, CNH- and USD-denominated China bond markets.
With a focus on quality, the Fund allocates at least 50% of the portfolio in securities that are rated investment grade at the time of purchase. The average credit quality of the portfolio7 is currently BBB.
Attractive income opportunities
The Fund offers monthly distributing “(mth)” and “(irc)” share classes, providing attractive income opportunities. Annualised yield of the Fund’s USD (mth) Class is 5.7%8 (Aim at monthly distribution. Dividend rate is not guaranteed. Distributions may be paid from capital. Refer to important information 3)
Active currency and duration management
The portfolio managers can take active currency positions to maximise returns or manage currency risk, offering potential appreciation of CNY and CNH. Duration9 is also managed actively, depending on different interest rate environments.
While a potential investment in Chinese bonds isn’t risk-free, the yields5 offered are generally higher than most developed and emerging market bonds amid a low rate environment. Being selective and keeping a focus on quality, the JPMorgan Funds – China Bond Opportunities Fund could offer investors potential opportunities to seek attractive risk-adjusted returns by accessing the US$13.9 trillion Chinese bond market1 .