JPM_logo_Eng
  • Funds

    Fund Listing

    • Fund Explorer
    • Fund Managers
    • Fund Documents

    Featured Funds

    • Multi Income Fund
    • Asian Total Return Bond Fund
    • China Bond Opportunities Fund
    • Income Fund
  • Insights

    Market Insights

    • Market Insights Overview
    • Guide to the Markets
    • Weekly Market Recap
    • On the Minds of Investors
    • Multimedia

    Retirement Insights

    • Retirement Insights Overview
    • Principles for a Successful Retirement
    • Building Better Retirement Portfolios
    • Are you letting volatility derail your retirement plan?
  • Investment Ideas
    • Managing Volatility
    • Growth Strategy
    • Income Strategy
    • Retirement and long-term investing
  • Personal Investing

    Knowing the Basics

    • Retirement Planning
    • Investing for Your Children’s Future
    • Ways to Diversify Your Portfolio
    • Mutual Funds 101

    Getting Started

    • Start Investing
    • Investment Ideas
    • Regular Savings Plan
    • eTrading Privileges
    • Open an Account Online with Ease
  • Retirement Services
    • ORSO Services
    • MPF Services
    • Retirement Fund Centre
  • Resources
    • About Us
    • Awards
    • Contact Us
    • Announcements
    • Forms & Literature
    • Investment Return Calculator
  • Library
Skip to main content
  • Language
    • English
    • 中文/ Chinese
  • Role
  • Country
  • eTrading Login
Search
Menu
CLOSE
Search
  1. Home
  2. Insights
  3. Investment Ideas
  4. Multi-asset income strategies in unique times

  • Share
  • LinkedIn Twitter Facebook Line
  • Print
  • Actions
  • LinkedIn Twitter Facebook Line
    Print

Multi-asset income strategies in unique times

Apr 2020 (4-minute read)

J.P. Morgan Asset Management

Key takeaways:

  • As investors grapple with the economic toll of a pandemic, we share our views on how we are positioning multi-asset portfolios amid ongoing volatility:

    1. We are adding liquidity and holding a conservative allocation in equities and credit.

    2. We are prepared to add further portfolio resilience if market volatility intensifies.

    3. We are monitoring signals to add back risk, though this may likely be months later.

    4. We maintain a diversified multi-asset income solution to help broaden income potential1.

As the world grapples with the fallout of a global public health crisis, the significant re-pricing of assets across markets has been unprecedented. With investors and policymakers treading uncharted territory, the economic backdrop that will characterise the next phase of a business cycle is being forged amid the current market volatility.

With the global economy sinking into recession, how will that impact investors in their search for income? Our Multi-Asset Solutions Team shares their views on why a multi-asset income strategy2 remains essential in this environment.
 

Q1:HOW HAVE YOU BEEN POSITIONING YOUR MULTI-ASSET INCOME STRATEGY IN RECENT MONTHS3? 
 

  • In late 2019, the global outlook had looked brighter - a US-China trade agreement, insurance cuts from the Federal Reserve and a tentative turn in the macro data spurred a year-end rally in risk assets.
  • Nonetheless, we entered 2020 with a more conservative risk exposure with reduced equity allocation as we are mindful of the potential headwinds that could emerge.
  • Now, we are grappling with the economic toll of a fast-spreading respiratory disease and the likelihood of a severe global recession for 2020. Against this backdrop, we have further strengthened portfolio resilience in the first quarter, whereby we:
    • extended US duration of the portfolio by adding to long positions in 10-year and 30-year US Treasuries.
    • added liquidity so that we would not become a forced seller in the market. The price action in March had the hallmarks of a liquidity crisis where the scramble for cash resulted in days where bonds, gold and other assets that are generally viewed as safer were sold indiscriminately, alongside riskier assets.
       

Q2:HOW ARE YOU MANAGING THE EXPOSURE TO HIGH-YIELD (HY) CREDIT3,4? 
 

  • We have been shifting up in quality for credit exposure since 2019. As of end-March 2020, more than 80% of our HY allocations were rated B- or above. 
  • High-quality HY has outperformed year-to-date.

Source: J.P. Morgan Asset Management, Bloomberg. ‘BB’ is Barclays US High Yield 2% Issuer Cap Ba (I20599US), ‘B’ is Barclays US High Yield 2% Issuer Cap B (I20600US), ‘CCC’ is Barclays US High Yield 2% Issuer Cap Caa (I20601US). Issuer weighted default rate on US HY allocation. Data as of end-March 2020. Past performance is not a reliable indicator of current and future results. Provided for information only, not to be construed as investment advice.

Q3:HOW ARE YOU MANAGING CURRENT VOLATILE MARKETS3? 

  • As of end-March, our multi-asset portfolios were on a recession footing and positioned for ongoing volatility - we added liquidity and held a conservative exposure in equities and credit. 
  • We are mindful of the risk of short squeezes, but the full impact on earnings has yet to emerge, and equities could stay volatile. We believe it is too early to add back to risk assets.
  • We have more tools available in our toolbox if market volatility intensifies. Duration management and usage of derivatives could be deployed to make additional changes to asset allocation.
  • We are also looking to build more duration and further add defensive assets such as agency mortgages and investment-grade corporate bonds within the portfolio if needed.
Read more

Q4:WHAT ARE THE SIGNALS TO ADD BACK RISK? 
  

  • Equities tend to bottom before economic data improves, but we are still on a lookout for one or more of the following signals:

    • A sustainable improvement in the infection rate
      • A flattening of the infection curve could help reduce downside risk but the upside in equities would be limited in the absence of a sustainable solution for the pandemic. The key is a breakthrough in terms of medical treatment and a vaccine.
    • Sizeable policy stimulus
      • Initial fiscal and monetary actions by authorities have been significant, proactive and appropriate. Further actions will be required to support economies though that could be difficult. We need to get conviction that authorities will continue to follow through with additional measures.
    • Valuations becoming undervalued
      • Just looking at market valuations, a recession has already been priced-in, with a decline of about 20% in developed market equities5. However, as we expect a severe recession, valuations are not at trough levels.
      • The signal from the price-to-earnings (P/E) ratio is cloudy as many historic equity bottoms have seen lower P/E ratios.
    • A turn in the data
      • Investors will need to determine how quickly the global economy can recover and whether the recovery will prove sustainable after an initial bounce.
         

Q5:WHY INVESTORS COULD CONSIDER A MULTI-ASSET INCOME STRATEGY3? 
 

  • The search for quality income becomes challenging with aggressive monetary easing globally.
  • Yields on core government bonds may fall further. While they could offer defensive ballast for portfolios, their role in income generation is minimal.
  • Broaden income potential through multiple income sources. A diversified multi-asset income solution could be considered a core part of an investment portfolio.
    • While diversification could be challenging amid panic selling and a liquidity squeeze, it is expected to function when markets eventually return to fundamentals.

Explore our investment solutions

Click here for more fund information


Click here for more fund information 

Click here to explore more Investment Ideas

Subscribe to our e-Newsletter

Conclusion


As the pandemic stretches on, the search for quality income remains challenging with the unconventional stimulus measures undertaken by central banks and governments around the world. Against this backdrop, a diversified multi-asset income solution could continue to help broaden income potential.

 

This represents investment team’s views as of 15 April 2020 based on current market conditions, subject to change from time to time. Provided for information only, not to be construed as investment or research recommendation.

Diversification does not guarantee investment return and does not eliminate the risk of loss.

1. We seek to achieve the investment objective, there is no guarantee these will be met.
2. 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.
3. Holdings, exposures and allocations for actively managed portfolios are subject to change from time to time. These represents MAS investment team’s views under current market conditions, subject to change from time to time. Provided for information only, not to be construed as investment advice. Diversification does not guarantee investment return and does not eliminate the risk of loss.
4. High-yield credit refers to corporate bonds which are given ratings below investment grade and are deemed to have a higher risk of default. For illustrative purposes only, exact allocation of portfolio depends on each individual’s circumstances and market conditions. Yield is not guaranteed. Positive yield does not imply positive return.
5. Developed market equities are represented by the MSCI World Index and Asia pacific ex-Japan equities are represented by the MSCI AC Asia Pacific ex-Japan. Source: Bloomberg Finance L.P., Dow Jones, FactSet, J.P. Morgan Economic Research, MSCI, J.P. Morgan Asset Management. Data reflect most recently available as of 31.03.2020.

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

Asset Allocation

  • JPMorgan China Income Fund
  • JPMorgan Funds - Asia Pacific Income Fund
  • JPMorgan Multi Balanced Fund
  • JPMorgan Multi Income Fund

Equity

  • JPMorgan Asia Growth Fund
  • JPMorgan Asia Equity Dividend Fund
  • JPMorgan China A-Share Opportunities Fund
  • JPMorgan China Pioneer A-Share Fund
  • JPMorgan Europe Strategic Dividend Fund
  • JPMorgan Pacific Technology Fund
  • JPMorgan Funds - US Technology Fund

Fixed Income

  • JPMorgan Asian Total Return Bond Fund
  • JPMorgan Funds – Income Fund
  • JPMorgan Global Bond Fund
  • JPMorgan Investment Funds - Global High Yield Bond Fund
See all funds

RELATED ARTICLES

A multi-income journey into the emerging high-yield potential

Income investors like us have stayed the course as we ride through the four seasons. Where do we see income opportunities?

Read More

What’s trending in China’s equity markets?

As the year begins, consider a 2021 list of China A-share ideas as you devise a plan for your investment portfolio?

Read More

Curious about income investing? We share 4 FAQs

How much do you know about income investing amid an evolving market environment?

Read More

Outlook 2021: portfolio positioning with ‘G.P.S.’

Uneven recoveries in 2021 would imply the need for more active management.

Read More

Year ahead 2021: seeking clarity amid macro uncertainty

As market volatility could persist in 2021, how can investors cut through the fog of uncertainty?

Read More

Outlook 2021: investment themes in a ‘new normal’

How a ‘new normal’ could shape investing in equities, fixed income and multi-asset solutions.

Read More

Keeping a longer investment horizon as events unfold in China and the US

What are the investment implications of China’s new economic blueprint and the US elections?

Read More

Finding growth: there’s still more to know about Asia

We share our views on how the public health crisis has accelerated some structural growth trends in Asia.

Read More

Finding growth: how a consumer’s routine can spark investing ideas

We share our perspectives on potential opportunities arising from evolving consumer behaviours.

Read More

Finding growth: it’s a digital revolution

We share our perspectives on riding the wave for future growth in tech investing.

Read More

What’s ahead for investing as Election Day approaches

With less than a month to go before the US elections, we look at the investment implications for 5 major economic sectors.

Read More

Building a stronger income portfolio as rates stay low

A persistent and flexible strategy has become more important ever in seeking income.

Read More

Recovering economy, reinforcing Chinese equity opportunities

Looking at China’s economic recovery and the beneficiaries in the long term.

Read More

Risks and potential opportunities for bonds in 4Q 2020

The potential opportunities and risks in bonds in the last stretch of 2020.

Read More

Securitisation 101: making optimal use of securitised debt

Let's explore the role securitised debt could play in an investment portfolio.

Read More

Why some investors are still investing in equities

Understand stock valuations for clues to potential opportunities in a market rally.

Read More

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.

Read More

What do the As and Bs in bond credit ratings mean for investors

Understand bond credit rating and broaden potential income opportunities.

Read More

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

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

Read More

Activating Asia’s bond potential with a dynamic approach

Actively manage local currency opportunities in an Asian bond portfolio.

Read More

What a weak US dollar could mean for a portfolio

Seeking investment opportunities as the US dollar weakens.

Read More

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.

Read More

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.

Read More

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.

Read More

Asian bonds: there’s still more to know

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

Read More

Chinese bonds: what, why and how

In the zero interest rate era, what are the income opportunities in Chinese bonds?

Read More

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?

Read More

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

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

Read More

Unlocking long-term growth potential in Asia

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

Read More

Navigating Chinese bonds with versatility

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

Read More

Riding through the highs and lows with global dividend opportunities

Striving to optimise potential equity income opportunities as markets recover.

Read More

Scenarios of an expected global economic recovery

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

Read More

Making the most of bond opportunities as the pandemic subsides

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

Read More

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.

Read More

Emerging trends set in motion for US technology

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

Read More

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.

Read More

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.

Read More

2Q 2020 bonds: weathering a market storm

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

Read More

Taking steps to stay on top of volatility

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

Read More

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.

Read More

Adding a fitting pace to your income portfolio

Diversify your income sources to help navigate uncertain markets.

Read More

Fixed income investing in uncertain times

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

Read More

Repositioning for income potential in uncertain times

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

Read More

Some investing dos and don’ts when markets are volatile

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

Read More

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.

Read More

China’s fundamentals signal resilience despite health crisis

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

Read More

The little red envelope savings guide

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

Read More

Aiming high when yield stays low

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

Read More

1Q 2020 bonds: where we see opportunities

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

Read More

Investing in a world of ultra-low rates

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

Read More

Securitisation 101: What are ABS and MBS?

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

Read More

Securitisation: Then and now

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

Read More

The secret to effective diversification

Diversification sounds easy, but how to do it effectively?

Read More
Market Views Volatility Asset Allocation
lets-solve-it-logo

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

J.P. Morgan Asset Management

  • Terms of Use
  • Privacy Statement
  • Cookies Policy
  • Investment Stewardship
  • Fund Notes
  • Offering Document(s)
  • Forms & Literature
  • Guide to Using This Website
  • Sitemap
J.P. Morgan

  • J.P. Morgan
  • JPMorgan Chase
  • Chase

The information contained herein is intended only for use by Hong Kong residents. By using this information, you are representing and warranting that you are either residing in Hong Kong or the applicable laws and regulations of your jurisdiction allow you to access the information, and you confirm that you accept the Terms of Use as set out in https://am.jpmorgan.com/hk/. Investment involves risk. Past performance is not indicative of future performance. In particular, funds which are invested in emerging markets and smaller companies may involve a higher degree of risk and are usually more sensitive to price movements. Investors should carefully read and consider the fund offering document(s), which contain details on investment objectives, risk factors, charges and expenses of the fund, before making any investment decisions. Investors should read carefully the fund notes before making any investment decisions. Information in this website does not constitute investment advice, or an offer to sell, or a solicitation of an offer to buy any security, investment product or service, nor a distribution of information for any such purpose. Opinions and statements of financial market trends set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. Investors should conduct their own verification. The views and strategies described may not be suitable for all investors. This website and the advertisements contained herein are issued by JPMorgan Funds (Asia) Limited. This website has not been reviewed by the Securities and Futures Commission of Hong Kong ("SFC"), with the exception of material relating to the JPMorgan Provident Plan that the SFC has pre-approved (however such pre-approval does not imply official recommendation by the SFC).

Copyright 2021 JPMorgan Funds (Asia) Limited. All rights reserved.