Important information

JPMorgan Funds - Asia Pacific Income Fund

  1. The Fund invests primarily in income generating securities of countries in the Asia Pacific region (excluding Japan), and may invest a significant proportion of its assets in below investment grade and unrated debt securities.
  2. The Fund is therefore exposed to equity, liquidity and convertibles risks, interest rate risks which may affect the price of bonds, credit and real estate market related risks (associated with the risk of investing in REITs and other property related securities; direct investment in real estate is not permitted) as well as the emerging markets and currency risks. Pertaining to investments in below investment grade or unrated debt securities, these securities may be subject to higher liquidity risks and credit risks compared with investment grade bonds, with an increased risk of loss of investment. For currency hedged share classes, the currency hedging process may not give a precise hedge and there is no guarantee that the hedging will be totally successful. For “(irc)” share classes, they may have greater capital erosion, and their NAV may fluctuate more and be significantly different from the other share classes. Investment in RMB hedged share class is subject to risks associated with the RMB currency and currency hedged share 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.
  3. The Fund may at its discretion pay dividends out of capital, giving priority to dividends rather than capital growth. The Fund may also at its discretion pay dividends out of gross income while charging all or part of the Fund’s fees and expenses to the capital of the Fund, resulting in an increase in distributable amount for the payment of dividends and therefore, effectively paying dividends out of realised, unrealised capital gains or capital. Investors should note that, share classes of the Fund which pay dividends may distribute not only investment income, but also realised and unrealised capital gains or capital. Payment of dividends out of capital amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to that original investment. Any dividend payments, irrespective of whether such payment is made up or effectively made up out of income, realised and unrealised capital gains or capital, may result in an immediate reduction of the net asset value per share.
  4. Investors may be subject to substantial losses.
  5. Investors should not solely rely on this document to make any investment decision.

MIXING INCOME AND GROWTH
CREATES VIBRANT ASIAN PORTFOLIOS

Which is why the JPMorgan Funds – Asia Pacific Income Fund empowers portfolios through a mixture of income and growth opportunities in Asia Pacific (ex-Japan), while the fund managers seek to mitigate volatility by flexible asset allocation.

Let's solve it

JPMorgan Funds – Asia Pacific Income Fund

Capture income and growth opportunities with flexible allocation
(Cantonese video)

US-China trade tension and concerns over inflation have brought about market uncertainties. How can investors capture the best opportunities amid various challenges?

Rank your concerns (1 = most important)

Amid the current
market condition,
my key concerns are:

Income is hard to find
Volatility is picking up
Rising rates can be a challenge
RESET SELECTIONS
Learn more about related challenges

INCOME CHALLENGE

How to generate income in the current market conditions

Producing an income from our savings is important, and income strategy can be a core strategy for investors seeking total returns with income. However, with rising rates, it may not be easy for investors to find the income they need to beat inflation.

Looking at the composition of total returns in 2017, dividends constitute an integral component in total return of equities. Asia is a fertile ground of high dividend stocks with the highest number of companies yielding more than 3%.

Number of companies yielding greater than 3% by region
Constituents of MSCI AC World Index

Source: J.P. Morgan Asset Management, FactSet, MSCI.
Dividend is not guaranteed. Positive yield does not imply positive return.
Guide to the Markets – Asia. Data reflect most recently available as of 30.06.2018.

How the Fund addresses the income challenge

The dividend opportunities in Asia are diverse, and not all dividends are the same. The fund managers invest in both “value” (cyclicals to capture upside potential) and “low-beta” (defensives to offer cushion against volatility) dividend stocks with a view to diversifying income sources across sectors. The fund managers adjust the exposure to value and low-beta stocks depending on the opportunities available in different market conditions.

Source: J.P. Morgan Asset Management, as of 30.06.2018. For illustrative purposes only.

VOLATILITY CHALLENGE

How to enjoy growth in Asia while mitigating volatility

Local investors are no stranger to Asia’s structural growth story, and the long-term potential in Asian equities should not be overlooked. However, investors are equally familiar with the volatility in the asset class.

It is worth noting that blending both Asian equities and Asian bonds historically demonstrated lower volatility while still capturing the strong growth potential.

Risk and return combinations in Asian asset classes

Source: J.P. Morgan, Thomson Reuters DataStream, data from 30.09.2005 to 30.06.2018. Asia ex-Japan Equities = MSCI AC Asia Pacific ex Japan Index (Total Return Net). Asian Fixed Income = J.P. Morgan Asia Credit Index (Total Return Gross).
Past performance is not indicative of future performance.

How the Fund addresses the volatility challenge

With a view to capturing the most attractive income opportunities across varying market conditions, allocation to bonds and equities may range from 25% to 75% respectively. In times of heightened market uncertainty, the fund managers may dial up the exposure to fixed income in order to mitigate volatility.
% BONDS
% EQUITIES

Source: J.P. Morgan Asset Management, as of July 2018

RATE HIKE CHALLENGE

How to tackle the rising interest rate environment

With rising interest rates and inflation prospects in sight, it may not work for investors to just stay on the sideline, as it can mean lower or negative real return.

In fact, in a rising rate environment, different asset classes react differently. Historically, Asia Pacific (ex-Japan) high dividend equities have recorded positive return during periods of rate hikes.

Total return in a rising yield environment*
Annualized average of rolling 3-month total return (USD), 1994-2018 YTD*
-13.7% -3.4% -3.2% 3.1% 3.9% 9.3% 9.5% 16.3% 16.8% 19.0% 23.7% 26.2% 26.4% 32.3% 34%

Source: J.P, Morgan Asset Management, Barclays, Bloomberg Finance L.P., FactSet, MSCI.
Based on MSCI World Index (DM Equity), MSCI World High Dividend Index (High div. DM Equity), MSCI Emerging Market Index (EM Equity), MSCI Emerging Market High Dividend Index (High div. EM Equity), MSCI AC Asia Pacific ex-Japan Index (Asia Pac. ex-JP), MSCI AC Asia Pacific Index (Asia Pac.), MSCI U.S. REIT Index (U.S. REITs), Bloomberg Barclays U.S. Aggregate Index (U.S. Agg.), Bloomberg Barclays U.S. Aggregate Credit High Yield Corporate Index (U.S. HY), Bloomberg Barclays U.S. Aggregate Credit Investment Grade Index (IG corporate), J.P. Morgan Government Bond Index –EM Global (GBI-EM) (EMD LLC), J.P. Morgan Emerging Market Bond Index Global (EMBIG) (EMD USD), Gold NYM $/ozt (Gold). *Trigger to count returns is if the 10-year yield rose more than 25bps in prior 3months. Returns are based on monthly returns from 31.01.1994 –30.06.2018. Past performance is not indicative of future performance. Guide to the Markets –Asia. Data reflect most recently available as of 30.06.2018.

How the Fund addresses the rate hike challenge

In a later phase of the economic cycle, the economy is growing stronger but at a moderating rate with inflation climbing higher. The fund managers seek opportunities in financial stocks considered to benefit from continued economic recovery – in the form of loan growth, asset quality improvement and margin expansion.

Source: J.P. Morgan Asset Management, as of 30.06.2018.

Why J.P. Morgan Asset Management?

  • ASIAN ASSET ALLOCATION
  • GLOBAL CAPABILITIES

Benefitting from the combined knowledge of equity and fixed income teams

~100
portfolio managers
and analysts
8
locations
globally^
assets under management
> USD 116 billion
assets under management
Emerging Markets & Asia Pacific
(EMAP) Equities Team
Asian Fixed Income Team
+10
investment
professionals
3
locations
in Asia
assets under management
USD 8.7 billion
assets under management

^ As of end-July 2018.
Source: J.P. Morgan Asset Management, as of end-June 2018.

People

+

Teams

+

Assets

Environmental, Social and Governance (ESG) INTEGRATION

ESG factors are embedded in our investment capabilities across equity, fixed income and multi-asset solutions.

Source: J.P. Morgan Asset Management, as of end-June 2018. Stated AUM figures exclude retail advisory and glide path portfolios.

Contact Us

Please contact your bank or financial adviser to learn more about the JPMorgan Funds – Asia Pacific Income Fund.

INCOME CHALLENGE

How to generate income in the current market conditions

Producing an income from our savings is important, and income strategy can be a core strategy for investors seeking total returns with income. However, with rising rates, it may not be easy for investors to find the income they need to beat inflation.

Looking at the composition of total returns in 2017, dividends constitute an integral component in total return of equities. Asia is a fertile ground of high dividend stocks with the highest number of companies yielding more than 3%.

Number of companies yielding greater than 3% by region
Constituents of MSCI AC World Index

Source: J.P. Morgan Asset Management, FactSet, MSCI.
Dividend is not guaranteed. Positive yield does not imply positive return.
Guide to the Markets – Asia. Data reflect most recently available as of 30.06.2018.

VOLATILITY CHALLENGE

How to enjoy growth in Asia while mitigating volatility

Local investors are no stranger to Asia’s structural growth story, and the long-term potential in Asian equities should not be overlooked. However, investors are equally familiar with the volatility in the asset class.

It is worth noting that blending both Asian equities and Asian bonds historically demonstrated lower volatility while still capturing the strong growth potential.

Risk and return combinations in Asian asset classes

Source: J.P. Morgan, Thomson Reuters DataStream, data from 30.09.2005 to 30.06.2018. Asia ex-Japan Equities = MSCI AC Asia Pacific ex Japan Index (Total Return Net). Asian Fixed Income = J.P. Morgan Asia Credit Index (Total Return Gross).
Past performance is not indicative of future performance.

RATE HIKE CHALLENGE

How to tackle the rising interest rate environment

With rising interest rates and inflation prospects in sight, it may not work for investors to just stay on the sideline, as it can mean lower or negative real return.

In fact, in a rising rate environment, different asset classes react differently. Historically, Asia Pacific (ex-Japan) high dividend equities have recorded positive return during periods of rate hikes.

Total return in a rising yield environment*
Annualized average of rolling 3-month total return (USD), 1994-2018 YTD*
-13.7% -3.4% -3.2% 3.1% 3.9% 9.3% 9.5% 16.3% 16.8% 19.0% 23.7% 26.2% 26.4% 32.3% 34%

Source: J.P, Morgan Asset Management, Barclays, Bloomberg Finance L.P., FactSet, MSCI.
Based on MSCI World Index (DM Equity), MSCI World High Dividend Index (High div. DM Equity), MSCI Emerging Market Index (EM Equity), MSCI Emerging Market High Dividend Index (High div. EM Equity), MSCI AC Asia Pacific ex-Japan Index (Asia Pac. ex-JP), MSCI AC Asia Pacific Index (Asia Pac.), MSCI U.S. REIT Index (U.S. REITs), Bloomberg Barclays U.S. Aggregate Index (U.S. Agg.), Bloomberg Barclays U.S. Aggregate Credit High Yield Corporate Index (U.S. HY), Bloomberg Barclays U.S. Aggregate Credit Investment Grade Index (IG corporate), J.P. Morgan Government Bond Index –EM Global (GBI-EM) (EMD LLC), J.P. Morgan Emerging Market Bond Index Global (EMBIG) (EMD USD), Gold NYM $/ozt (Gold). *Trigger to count returns is if the 10-year yield rose more than 25bps in prior 3months. Returns are based on monthly returns from 31.01.1994 –30.06.2018. Past performance is not indicative of future performance. Guide to the Markets –Asia. Data reflect most recently available as of 30.06.2018.