Get invested, stay invested.

By combining J.P. Morgan’s time-tested equity research with a disciplined index options strategy, the Hedged Equity Fund enables investors to participate in equity markets while mitigating downside risk.



Source: Morningstar as of 3/31/16. Show for illustrative purposes only and is meant to show how the fund performs vs. the S&P 500 index in both up and down markets. Past performance is no guarantee of future results. Risk refers to standard deviation.

Key points

  • Research-driven equity investment managed by experienced portfolio managers Hamilton Reiner and Raffaele Zingone who leverage insights from 27 equity analysts.
  • Uses a disciplined options strategy to provide downside hedge in falling markets in exchange for forgoing a portion of the upside.
  • Offers lower volatility and potential for better risk-adjusted returns than long-only investments.
  • Historically offered downside hedge during market turbulence.

Smoother ride for equity investors

The Fund leverages the experience and insight of 28 research analysts who rank stocks into quintiles based on normalized earnings. The team has a proven track-record: top-quintile stocks have outperformed bottom-quintile stocks since the process inception in 1986.

This research is combined with a disciplined index options strategy that acts as a hedge to reduce risk in adverse market environments. The result is a conservative equity solution that forgoes a portion of the upside in exchange for protection against falling markets: the Fund seeks to deliver half the volatility of the S&P 500 Index.


Chart source: J.P. Morgan Asset Management. January 1, 1986–March 31, 2016. Chart shows annualized performance of quintiles (as determined by J.P. Morgan research universe) versus the S&P 500 Index, with quintiles rebalanced monthly. Quintile performance results have certain inherent limitations. Unlike an actual performance record, quintile results do not represent actual trading, liquidity constraints, fee schedules and transaction costs. No representation is being made that any portfolio will or is likely to achieve profits or losses similar to those shown.

Hedged equities: the upside of downside protection

Hamilton Reiner | October 21, 2015

Watch as Hamilton Reiner, Portfolio Manager and Head of U.S. Equity Derivatives, discusses his 4 primary beliefs in regards to hedged equity strategies.


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Fees and Investment Minimums

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Fund Managers

For more information about this fund, please see the commentary posted below. 
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Please refer to the prospectus for additional information about cut-off times.

Total return assumes reinvestment of income.

The S&P 500 Index is an unmanaged index generally representative of the performance of large companies in the U.S. stock market. Index levels are in total return USD. The performance of the index does not reflect the deduction of expenses associated with a fund, such as management fees. By contrast, the performance of the Fund reflects the deduction of the fund expenses, including sales charges if applicable. An individual cannot invest directly in an index.

The BofA Merrill Lynch 3-Month U.S. Treasury Bill Index is comprised of a single issue purchased at the beginning of the month and held for a full month. Each month the index is rebalanced and the issue selected is the outstanding Treasury Bill that matures closest to, but not beyond 3 months from the rebalancing date. The performance of the index does not reflect the deduction of expenses associated with a fund, such as investment management fees. By contrast, the performance of the Fund reflects the deduction of the fund expenses, including sales charges if applicable. An individual cannot invest directly in an index.

The performance of the Lipper Alternative Long/Short Equity Funds Average includes expenses associated with a mutual fund, such as investment management fees. These expenses are not identical to the expenses charged by the Fund.

Total return assumes reinvestment of dividends and capital gains distributions and reflects the deduction of any sales charges, where applicable. Performance may reflect the waiver of a portion of the Fund's advisory or administrative fees and/or reimbursement of certain expenses for certain periods since the inception date. If fees had not been waived and/or certain expenses were not reimbursed, performance would have been less favorable.

©2016, American Bankers Association, CUSIP Database provided by the Standard & Poor's CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. All rights reserved.
The following risks could cause the fund to lose money or perform more poorly than other investments. For more complete risk information, see the prospectus.

Investments in derivatives may be riskier than other types of investments. They may be more sensitive to changes in economic or market conditions than other types of investments. Many derivatives create leverage, which could lead to greater volatility and losses that significantly exceed the original investment.

The prices of equity securities are sensitive to a wide range of factors, from economic to company-specific news, and can fluctuate rapidly and unpredictably, causing an investment to decrease in value.

Positions in equity options can reduce equity market risk, but can limit the opportunity to profit from an increase in the market value of stocks in exchange for upfront cash at the time of selling the call option. Unusual market conditions or the lack of a ready market for any particular option at a specific time may reduce the effectiveness of option strategies and could result in losses.
Total return assumes reinvestment of income.

The top 10 holdings listed reflect only the Fund's long-term investments. Short-term investments are excluded. Holdings are subject to change. The holdings listed should not be considered recommendations to purchase or sell a particular security. Each individual security is calculated as a percentage of the aggregate market value of the securities held in the Fund and does not include the use of derivative positions, where applicable.

P/E ratio: the number by which earnings per share is multiplied to estimate a stock's value.

P/B ratio: the relationship between a stock's price and the book value of that stock.

Tracking Error: The active risk of the portfolio, which determines the annualized standard deviation of the excess returns between the portfolio and the benchmark.

Alpha: The relationship between the performance of the Fund and its beta over a three-year period of time.

EPS: Total earnings divided by the number of shares outstanding.