Portfolio Chart: Navigating the Buy-High, Sell-Low Dilemma in Asian equities

Important Information

1. The Fund invests primarily (at least 70%) in equity securities of listed companies in Asia (excluding Japan), and using derivatives where appropriate.
2. The Fund is therefore exposed to risks related to equity, derivatives, emerging markets, concentration, smaller companies, currency, liquidity, hedging and class currency.
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.
4. Investors may be subject to substantial losses.
5. Investors should not solely rely on this document to make any investment decision.

Investors tend to buy high, sell low

Asian equities is an attractive asset class for investors as they present opportunities for capital appreciation and dividend growth.  However, some investors like to time the market, trading on short-term newsflow and market movements. In reality, market timing is not easy, and often leads to irrational decisions which detract from long-term returns.

Historical data (as illustrated below) shows that investors have the tendency to buy high and sell low. Behavioural bias can explain this. It is normal for investors to be fearful when the market falls and be greedy when the market goes up. Investors may forgo long-term capital upside potential and risk buying high when the sentiment is hot and valuations are expensive.  

How to overcome behavioural bias?

Market volatility is uncomfortable but normal. There are ways to overcome investment bahavioural bias and make better informed investment decisions:

1. Hone in on dividend-paying quality stocks:
   
   These equities are typically less sensitive to the broad market (lower beta). Dividend-paying stocks, particularly those in Asia, are generally less volatile than the broader market. On the other hand, quality businesses with disciplined cost control and pricing power are generally more resilient in navigating market cycles and are better positioned to capture long-term capital growth.
   
   
2. Enhance income in your equity portfolio:
   
   Unforeseen price movement would trigger emotional reactions and may lead to unwise investment decisions. Building an extra source of income through writing call options¹ can strengthen income stream of the portfolio, providing  stronger incentive for investors to stay invested when volatility heightens. 
   

Seeking higher level of income in Asian equities

JPMorgan Asia Equity High Income Fund is a solution that seeks to provide investors with a high level of income through a smoother journey when investing into the long-term growth potential of Asian equities.

• Equity dividend portfolio:
  
  The low-beta tilt equity income portfolio is founded on a prudent stock selection process that identifies Asian dividend stocks with quality attributes and earnings growth potential. 

• Option overlay strategy:
  
  Together with call option writing¹, the Fund is designed to transform some of the potential capital gains into today’s income. This helps generate extra income to be collected from option premium, and in turn provides a level of downside risk management particularly in volatile markets.  This helps investors experience a less volatile total return stream than the broad market².

With a combination of an Asian equity portfolio focused on quality dividend stocks and the additional income sourced from call option writing, we believe this solution empowers those who found this strategy fit their investment objectives and risk appetites to stay invested long-term in Asian equities.