FOR WHOLESALE CLIENTS USE ONLY. NOT FOR RETAIL CLIENTS USE OR DISTRIBUTION JPMorgan Global Strategic Bond Fund
Each fixed income investment we make is approached with the utmost due diligence and a fiduciary mindset. As lenders of our clients money, we harness the power of our diverse perspectives in an effort to deliver stronger fixed income portfolios that help solve our clients needs. Robert Michele Managing Director and Chief Investment officer Head of the Global Fixed Income, Currency & Commodities Group 2 JPMORGAN GLOBAL STRATEGIC BOND FUND
INSIGHTS The role of Fixed Income and problems to be aware of Government bond allocations have traditionally played an important role in well-built portfolios, generating income, preserving capital and helping to diversify risks from more volatile allocations like equities. Over the past 30 years these bond allocations have performed well. As interest rates globally have fallen, in response to slowing economic growth and falling levels of inflation, government bond allocations have provided strong returns through coupon income and capital gains from increasing bond prices. However, as the chart below indicates, the income component from the coupon has been getting lower and lower as governments have been able to issue bonds at lower interest rates. Investors should be aware that as a result, the coupon component may not be able to dampen future negative price movements in the same way it has done historically. In addition, while capital gain is increasingly a large component of fixed income returns, they are not guaranteed and can easily become capital losses. Therefore, having a manager who can both capture the opportunities and avoid the risks can make a big difference in your fixed income portfolio. BLOOMBERG BARCLAYS GLOBAL AGGREGATE INDEX ANNUAL RETURN COMPONENTS Total return 10% 8% 6% 4% 2% 0% -2% -4% As at 31 July 2017. Source: Barclays Live. Past performance is not necessarily a reliable indicator for current and future performance. SELECT GOVERNMENT 10 YEAR BOND YIELDS US UK Germany Japan 18 % Fall of Berlin Wall Britain leaves 1989 Black Friday European Exchange 1987 Rate Mechanism 1992 Asian currency 12 6 2000 2001 Oil shock 1981 Coupon Return 2002 2003 2004 2005 2006 Capital Gain Return 2007 2008 2009 2010 2011 crisis 1997 Yield to Maturity Yield to Maturity (RHS) 5% 4% 3% 2% 1% 0% -1% -2% 2012 2013 2014 2015 Dot com bubble Feb 2000 9/11 attacks 2001 2016 2017 YTD Fed QE 2008 Fed QE2 2010 BoE QE 2009 Fed QE3 2012 What can investors do? Diversification. As the income component has fallen, investors need to broaden their investment scope beyond traditional domestic government bonds into international government bonds, corporate bonds (both investment grade and high yield) and other areas of the global fixed income markets. Bonds will still play a critical role in an investor s portfolio now and in the future, but they need to work harder to achieve an investors goal of income, capital preservation and diversification. ECB QE US 2015 election 2016 Brexit vote 2016 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Source: FactSet, Tullett Prebon, J.P. Morgan Asset Management. Guide to the Markets - Europe. Data as of 30 June 2017. 2016 JPMORGAN GLOBAL STRATEGIC BOND FUND 3
INSIGHTS JPMorgan Global Strategic Bond Fund INVESTMENT OBJECTIVE To achieve a return in excess of the Bloomberg AusBond Bank Bill Index by exploiting investment opportunities in, amongst others, the debt and currency markets, using financial derivative instruments where appropriate. KEY FEATURES OF THE FUND Best ideas actively managed global bond fund Diversified opportunity set across global fixed income and currency markets Dynamic sector management, aiming to only take risk when compelling investment opportunities are identified Focused on mitigating downside risk EXTENDED SECTORS Seeks income and total return Lower sensitivity to interest rates Currency Concentrated Higher volatility band CORE COMPLEMENTS Seeks reduced correlations to core holdings Absolute return strategies Lower volatility band JPMorgan Global Strategic Bond Fund CORE HOLDINGS Seeks lower volatility and diversification to equities AUSTRALIAN Sovereign bonds High grade corporate bonds GLOBAL Sovereign bonds High grade corporate bonds Shown for illustrative purposes only. Because everyone s circumstances are unique, these models can provide a framework for discussion between you and your financial adviser. They should not be taken as one-size-fits-all investment advice. Asset allocation/diversification does not guarantee investment returns and does not eliminate the risk of loss. Risk level of the fund Medium risk. As the fund substantially invests the majority of its assets in debt securities issued in developed and emerging markets, including, but not limited to, debt securities of governments and their agencies, state and provincial governmental entities, supranational organisations, corporations, banks, asset-backed securities and mortgage-backed securities, the fund is considered medium to high risk since these investments are considered a medium to high risk asset class. Please refer to the Product Disclosure Statement and Reference Guide for more information. 4 JPMORGAN GLOBAL STRATEGIC BOND FUND
INSIGHTS SOLUTIONS ANNUALISED PERFORMANCE AND DISTRIBUTION % 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 JPM Global Strategic Bond Fund Benchmark* 0.0 1 Month 3 Months 6 Months 1 Year 2 Year 3 Year Since Inception Source: J.P. Morgan Asset Management as at 31 July 2017. Net of fees performance is calculated on Bid Bid with gross income reinvested, e.g. net of ongoing fees and expenses.* Benchmark: Bloomberg AusBond Bank Bill Index. DELIVERING STABLE INCOME DISTRIBUTION FOR QUARTER END ACTUAL DISTRIBUTION YIELD 30 September 2015 0.69% 30 December 2015 1.13% 31 March 2016 1.15% 30 June 2016 1.20% 30 September 2016 0.77% 31 December 2016 0.59% 31 March 2017 0.61% 30 June 2017 0.71% SUITABILITY / INTENDED INVESTORS JPMorgan Global Strategic Bond Fund is a bond fund for investors looking for an absolute return that seeks to exceed the return of the Benchmark in diverse market environments over time from a combination of capital appreciation and income while reducing the likelihood of capital losses on a medium term basis through a flexible, diversified multi-sector approach. Source: J.P. Morgan Asset Management as at 30 June 2017. Past performance is not a reliable indicator of future performance and investors may not get back the full amount invested. Future performance and return of capital is not guaranteed. HOW TO INVEST AND CONTACT DETAILS The JPMorgan Global Strategic Bond Fund is available on most major platforms including: AMP North iaccess Summit Portfolio Care AMP Multiport AMP Personalised Portfolio Asgard BT Panorama BT Wrap Colonial First Wrap HUB24 IOOF Employee Super IOOF Portfolio Service IOOF Pursuit Core IOOF Pursuit Select Macquarie Wrap MLC Navigator MLC Wrap netwealth PowerWrap Wholesale-directed mfund Settlement Service JPMORGAN GLOBAL STRATEGIC BOND FUND 5
INSIGHTS SOLUTIONS Harness the power of our research We have developed our fixed income capabilities with one central aim: to build stronger portfolios to solve client needs. Today, we are one of the world s largest fixed income managers, with deep research capabilities, a diverse product palette across sectors and regions, and broad expertise developed over 60 years of changing market cycles. 275+ FIXED INCOME INVESTMENT PROFESSIONALS 1 11 LOCATIONS IN 7 COUNTRIES 1 CENTRALISED RESEARCH, RISK & TRADING PLATFORM 19 INVESTORS AVERAGE YEARS OF EXPERIENCE 1 1 J.P.Morgan Asset Management. As of June 30, 2017. Includes portfolio managers, research analysts, traders and client portfolio managers. Industry experience calculated for portfolio managers/traders with a title of VP or above. 6 JPMORGAN GLOBAL STRATEGIC BOND FUND
CAPABILITIES Deep research Strong risk management A COMMON GLOBAL RESEARCH LANGUAGE Every investment decision we make is backed by proprietary research. Fundamental factors include macroeconomic data (such as growth and inflation) as well as corporate health figures (such as default rates, earnings and leverage metrics) Quantitative valuations is a measure of the extent to which a sector or security is rich or cheap (on both an absolute basis as well as versus history and relative to other sectors) Technical factors are primarily supply and demand dynamics (issuance and flows), as well as investor positioning and momentum INTEGRATED, MULTI-LAYERED RISK MANAGEMENT Risk management is embedded at every stage of our investment process from establishing our quarterly investment strategy, to selecting individual securities, to constructing portfolios. Our multi-dimensional risk framework combines proprietary and recognised third-party tools with multiple layers of oversight, acknowledging that risk in fixed income is dynamic and multi-faceted, and that no single measure can capture all aspects of risk. PROPRIETARY RISK TOOLS SCENARIO ANALYSIS INDEPENDENT RISK OVERSIGHT Used to monitor volatility, correlation and duration Allows us to test for worst case historical and customised scenarios Ensures regular review of portfolio risk exposures JPMORGAN GLOBAL STRATEGIC BOND FUND 7
FOR WHOLESALE CLIENTS USE ONLY. NOT FOR RETAIL CLIENTS USE OR DISTRIBUTION BUILDING STRONGER PORTFOLIOS At J.P. Morgan Asset Management, collaborating with our clients in an effort to build stronger portfolios drives everything that we do. We are committed to sharing our expertise, insights and solutions across all asset classes to help make better investment decisions. Whatever you are looking to achieve, together we can solve it. NEXT STEPS For more information, please contact us on: Telephone: 1800 576 468 Email: jpmorgan.funds.au@jpmorgan.com Web: www.jpmorganam.com.au NOTES Net of fees performance is calculated on Bid Bid with gross income reinvested, e.g. net of ongoing fees and expenses. FX Adjusted returns have been calculated by JPMAM. Blended benchmarks have been calculated by JPMAM. IMPORTANT INFORMATION FOR WHOLESALE CLIENT USE ONLY. NOT FOR RETAIL CLIENTS USE OR DISTRIBUTION This information has been provided by JPMorgan Asset Management (Australia) Limited (ABN 55143832080) (AFSL 376919), the manager of the fund featured in this document. Perpetual Trust Services Limited (ABN 48 000 142 049) (AFSL 236648) is the fund s Responsible Entity. This document is for information purposes only and should not be taken as containing any financial product advice or recommendation. It does not take into account an individual s financial circumstances. Investors should consider the Product Disclosure Statement of the fund (available from www.jpmorganam.com.au) to understand the various risks associated with investing in the fund and in making any investment decision. Past performance is not a reliable indicator of future performance and investors may not get back the full amount invested. Future performance and return of capital is not guaranteed. Information is considered correct at the time of issue but no liability for errors or omissions will be accepted by JPMorgan Asset Management (Australia) Limited or its affiliates. This document is confidential and intended solely for the person to whom it is provided by the issuer. Bloomberg Finance L.P. and its affiliates (collectively, Bloomberg ) are not affiliated with the Manager and do not approve, endorse, review, or recommend the Fund. Bloomberg and the Benchmark are trademarks or service marks of Bloomberg and have been licensed to the Manager. Bloomberg does not guarantee the timeliness, accurateness, or completeness of any data or information relating to the Benchmark. 4d03c02a8004f3c6 APAC CS-27869