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    From diagnosis to investing: capturing medtech opportunities
    From diagnosis to investing: capturing medtech opportunities
    Medical Technology Image
    Important information
    JPMorgan Future Transition Multi-Asset Fund
    1. 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.
    2. 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.
    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. 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.
    4. Investors may be subject to substantial losses.
    5. Investors should not solely rely on this document to make any investment decision.

    Key takeaways:

    • Telehealth is in the spotlight as the global public health crisis accelerated demand for contactless and virtual medical treatments.
    • Innovative technologies in healthcare have contributed significantly to improving patient care, presenting growth opportunities in medical technology (medtech) and digital health companies1.

    Telehealth on the rise

    Telehealth, a case of technology meeting healthcare, has become trendy in recent years.

    In Hong Kong, hospitals, clinics and telecommunications companies have been increasingly shifting medical services to patients’ homes2. Since the start of the global public health crisis, 95% of physicians have increased their use of video consultations by 50% to provide medical care to patients3, reducing patients’ and clinicians’ risk of exposure and infection.

     

    Remote patient monitoring and self-diagnostics, and trials of hybrid online-and-offline models are bringing new care models for patients amid accelerating investments in digital health, according to a McKinsey & Co. report4. The total venture capital investment into the digital health space stood at US$14.7 billion in 1H 2021, compared with investment of US$14.6 billion for the whole of 2020, and nearly twice the investment of US$7.7 billion in 20194.

    Additionally, structure trends of an ageing population, exponential increase in expenditure and the need for better efficiencies in the healthcare system are presenting long-term investment growth opportunities for the medtech industry1.

     

    Adding a robotics touch

    Medical organisations are increasingly harnessing smart technologies to accelerate efficiencies, reduce unnecessary treatments and improve preventive care.

    For example, some medtech companies have been applying machine learning and artificial intelligence (AI) technologies when designing and upgrading surgical robots, allowing for greater precision during surgical operations. This has resulted in shorter patient recovery time. In addition to AI innovation in diagnostics and surgery, advanced technologies in healthcare also provide investment exposure to medical devices.

    Taking more steps a day

    Additionally, supportive government initiatives such as using big data in smart healthcare - storing the residents’ lifelong health records in an encrypted format shared by private and public hospitals5 – could improve the healthcare service quality and have given the medtech industry a boost.

    Smart technologies have also started to integrate in the way people live. The Singapore government has a physical activity programme, the “National Steps Challenge” to promote healthy living. With step-trackers, residents are encouraged to walk more than 10,000 steps a day. Since its launch in November 2015, 70% of previously inactive participants have now averaged more than 7,000 steps per day, with 30% of participants clocking about 10,000 steps a day on average6.

    How we are investing in future world trends in our asset allocation strategy1

    In this strategy, we believe that future transition can capitalise on multiple trends. We have identified five key themes7 that are shaping our future for the JPMorgan Future Transition Multi-Asset Fund.

     

    Thematic investment in a multi-asset framework

    We seek to enhance the multi-asset portfolio with a targeted allocation to these secular investment themes, and we utilise big data and fundamental insights to identify them. We harness a robust technology architecture with proprietary computing and storage capabilities.

    Using natural language processing, our innovative and proprietary ThemeBot AI tool8 helps to analyse hundreds of millions of data sources in a short period of time, thus allowing our investment professionals to make informed decisions more efficiently.

    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 Fund8

    Conclusion

    The demand for telehealth, innovative AI technologies and medical devices is accelerating after the global public health crisis4. This rising demand is also driven by structural trends such as an increasingly ageing population in many major economies. Governments are also increasingly adopting innovative technologies to improve healthcare efficiencies and quality. Innovating medtech companies are thus presenting investors with exposure to long-term growth opportunities1 in the industry.


    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: “HKSH Launches Telemedicine Service for Family Medicine and COVID-19 Screening Tests”, HKSH Medical Group, 06.04.2020.
    3. Source: “Pulse of the industry: medical technology report 2020”, Ernst and Young, Fall 2020. Provided for information only to illustrate macro trends not to be construed as offer, research or investment advice.
    4. Source: “Telehealth: A quarter-trillion-dollar post COVID-19 reality?”, McKinsey & Company, 09.07.2021.
    5. Source: “Hong Kong Smart City Blueprint 2.0”, Innovation and Technology Bureau, Hong Kong, December 2020.
    6. Source: “National Steps Challenge & the Healthy 365 app”, Smart Nation Singapore, updated as of 30.08.2021.
    7. Source: J.P. Morgan Asset Management, as of end-July 2021. The opinions and views expressed here are those held by the author as at the date of this document, which are subject to change and are not to be taken as or construed as investment advice. Provided for information only to illustrate macro trends not to be construed as offer, research or investment advice. Forecasts or estimates are indicative, may or may not come to pass. The manager seeks to integrate environmental, social and governance (“ESG”) factors in the investment process. ESG integration is the systematic integration of material ESG factors in company/issuer selection through research and risk management. It involves proprietary research on financial materiality of the ESG factors in relation to the relevant company/issuer and discretion to invest regardless of whether the company/issuer may be positively or negatively impacted by the ESG factors.Integration of ESG factors in the Fund’s investment process does not imply the Fund incorporates ESG factors as its key investment focus. The Fund is not authorised as an ESG fund by the Securities and Futures Commission, nor is it being marketed as an ESG fund.
    8. Source: J.P. Morgan Asset Management, as of end-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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