The weather condition is a key factor in determining a hiking trail, just like how market conditions can play a crucial role in asset allocation. Dividend stocks are back in the spotlight supported by stronger earnings results as economies around the world gradually reopen. As illustrated in the chart ³, dividend stocks have lagged growth stocks in 2021, and we are seeing a rotation as vaccine efficacy improves.

We believe the stocks of some quality corporates could still present opportunities for dividend income, alongside growth potential.

3. Source: Bloomberg, J.P. Morgan Asset Management, as of 31.01.2022. All indices in local currency: MSCI World Index, MSCI World High Dividend Index, MSCI Europe High Dividend Index, MSCI Emerging Market High Dividend Index, S&P 500 Index. Indices do not include fees or operating expenses and are not available for actual investment. Past performance is not indicative of current or future results.

Some trails on rough terrain may be difficult to navigate but they do offer spectacular views. As a part of their overall trek, hikers could consider these ‘higher-yielding’ trails based on their fitness level and whether they are properly equipped to tackle the uneven terrain.

Depending on an investor’s financial objectives and risk appetite, fixed income assets with higher-yielding potential, such as some high-yield bonds^{^}, can present relatively attractive opportunities. US defaults are low as the economic recovery supports corporate earnings growth. The fixed income assets of some European corporates could also present potential diversification benefits.

^ High-yield credit refers to corporate bonds which are given ratings below investment grade and are deemed to have a higher risk of default. Yield is not guaranteed. Positive yield does not imply positive return.

Some seasoned hikers may prefer to explore new trails when on a hike. Similarly, investors, depending on their financial objectives and risk appetite, could go beyond traditional income sources such as cash savings and government bonds in their investment journey. As a part of an overall diversified portfolio, we believe income opportunities can be found in non-traditional sources such as securitised⁵ assets and other hybrids (preferred equity and real estate investment trusts) across regions, sectors and asset classes.

JPMorgan Multi Income Fund invests flexibly across different asset classes and markets globally to seek out a diverse range of compelling income opportunities¹. Even amid periods of heightened volatility, we continue to invest flexibly, striving for a consistent income stream and growth opportunities.

As illustrated below, the primary holdings in the Fund include equities (45%) and high-yield bonds⁴ (26%), as of 31 January 2022.

• Dividend stocks: Over the past year, we continue to see income opportunities from developed-market dividend stocks
• High-yield bonds⁴: supported by the economic recovery, corporate earnings growth and lower defaults
• Hybrids securities from convertibles and preferred equities, which are generally higher in the capital structure and are supported by strong fundamentals in financials and robust capitalisation of banks.
  
  

6. Source: J.P. Morgan Asset Management. Allocation data as at 31.12.2020, 31.03.2021 and 31.01.2022. The Fund is an actively managed portfolio, holdings, sector weights, allocations and leverage, as applicable are subject to change at the discretion of the Investment Manager without notice. Cash exposure represents both physical cash and derivative cash offset. Physical cash was 6.0% as of 31.01.2022. Duration figures indicates portfolio duration. Provided for information only to illustrate macro trends, team’s current views and investment process, not to be construed as research or investment advice. Not indicative of current or future results. Investments involve risks and are not similar or comparable to deposits. Not all investments are suitable for all investors.

Different assets react differently under changing market conditions. We believe that employing a flexible and dynamic approach across multiple income sources can help build a robust portfolio while managing risk².