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JPM Global Income A CHF

LU0826331620

Presentation

Using a flexible approach that seeks only the best income opportunities from around the globe, Global Income Fund aims to provide investors with a consistent and attractive income stream and the opportunity for capital growth. The Fund is a flexible and diversified multi-asset portfolio that draws on a global opportunity set to deliver an attractive and diversified yield for a balanced level of risk. For over 10 years the Fund has provided attractive monthly or quarterly income in conjunction with capital growth.

Interview

SCHOENHAUT Michael

Date of assumption of fund management duties
11 December 2008

  • Michael Schoenhaut, CFA, managing director, is a portfolio manager on JPMAM's Multi-Asset Solutions team, based in New York. Michael is responsible for a global suite of multi-asset income strategies and is lead portfolio manager across the funds.  He focuses on asset allocation, portfolio construction, manager selection and risk management. 
  • He was previously a member of the SmartRetirement portfolio management team which was awarded the 2014 Morningstar U.S. Allocation Fund Manager of the Year for their efforts. 
  • An employee since 1997, Michael has held other positions within Multi-Asset Solutions, including portfolio manager for GTAA and balanced strategies and head of quantitative portfolio management.  Michael earned a Bachelor of Science in Operations Research and Industrial Engineering from Cornell University and is a CFA charterholder.

What is your approach to income investing?

The Global Income Fund is a flexible multi-asset portfolio that looks to generate an attractive level of income & capital growth with a balanced risk profile. We don't have a yield target & we don't aim to be the highest yielder. Rather we believe that by utilising a diversified approach to investing we can generate attractive income whilst maintaining a consistent risk profile. The Fund invests across a broad opportunity set which typically includes high dividend equities, high yield bonds, investment grade credit and government bonds but will also include tactical positions in areas such as securitised credit, preferred equity & convertible bonds.

Today we are invested across 14 different asset classes globally which provides a diversified source of income.

Who is the team?

I have been managing the Fund since inception in 2008. Co-manager Eric Bernbaum has also been working on the strategy since inception and was named as a manager in 2018.

We are both members of the Multi-Asset Solutions team which is a global team of over 80 experienced investment professionals dedicated to designing, constructing and managing multi-asset class portfolios to achieve specific investment outcomes.

Eric & I are responsible for implementing our top down views via active asset allocation & we work in conjunction with asset class specialists from across the JPMorgan Asset Management platform to select the most attractive income opportuities from a diversified opportunity set.

The Fund provides clients with access to the best income ideas from across JP Morgan globally, in a single actively managed portfolio.

Is income sustainable in a low interest rate environment?

Yes. The challenge today isn't that there’s no income available. The challenge is that there is no safe income available. The decline in cash yields & government bond yields is forcing clients further and further out on the risk spectrum. Hunting for yield is simply equivalent to hunting for risk.

We believe that a diversified multi-asset approach to income investing can provide yield whilst managing those risks. Over the past decade interest rates have remained low & we've consistently delivered attractive income with a balanced risk profile.

What are your expectations for 2020?

In our view, three factors—a global manufacturing slump, heightened geopolitical tension and easier monetary policy— were the hallmarks of 2019. As trade tensions lessen and easier monetary policy prevails we note that downside tail risks have declined and the balance of economic risks for 2020 is rather more even than back in 2017. Some upside risks, such as a recovery in corporate confidence and activity, now appear more plausible. However, we expect 2020’s recovery in economic activity to be more tempered than the rebound we saw in 2017, as the ingredients for a synchronised upswing in global growth are not so fresh and pent-up demand is less evident. Equally, though, our economic outlook anticipates a rebound in activity sufficient to provide trend-like growth and maintain high levels of employment, but not strong enough to stoke inflation and force central banks to rethink their accommodative policy. In fact our baseline forecast is predicated on a path for global monetary policy that maintains an accommodative level and cautious tone in 2020, but where the sum total of easing is not nearly as large as it was this year.

This backdrop leads us to become marginally more constructive on risk in our multi-asset income portfolios. However, our allocation mix remains at the conservative end of the spectrum.

What is the current allocation?

As we have become more constructive on the outlook this year we have added marginally to equities in our income portfolios.

Today we have an allocation of 34% in equities, diversified across US, Europe, emerging markets, REITs and infrastructure equities. High yield bonds remain a core allocation with 35% split across the US & Europe. Elsewhere we are seeking diversification & yield in asset classes such as securitised credit which reflects the health of the US consumer who is in very good health. We maintain smaller allocations to emerging market debt, preferred equity, convertible bonds and have recently added some golobal investment grade credit.

What is the current yield?

The Global Income Fund A EUR is currently paying 4.1% annualised. Our expectation if that we can comfortably maintain that level of yield as we look to the year ahead. As always, risk is a key consideration for us & we won't over reach for yield.

Fund strengths and weaknesses

Advantages

  • Benefits from the insight of over 87 investment professionals, with track record of 45 years
  • Flexible approach with disciplined risk management in search of attractive income
  • Consistent and attractive income far above cash-based investments

Disadvantages

  • Risk involving stock market volatility
  • Risk of a loss of capital in case of market declines
  • Possibility of non-achievement of expected objectives of the fund

The fund in detail

Code ISIN
LU0826331620

Type of fund
Income - Asset Allocation

Management style (asset / liability)
Active

Currency
CHF

Recommended investment period
-

Synthetic risk indicator(1)
4

Frequency scoring
Daily

Appropriation of results (capitalisation / distribution)
Capitalisation

Domiciliation
Luxembourg

Management fees
1,25%

(1) The synthetic risk indicator gives an indication of the risk associated with a fund or a sub-fund. There are seven risk classes (from '1' to '7'), with '1' referring to the lowest risk and '7' to the highest risk. Risk classification is based on the calculation of the fund's standard deviation, a measure of dispersion around an average done on an annual basis of the returns obtained over the last five years, or over a shorter period if the fund has less than five years track record In other words, this indicator demonstrates how far the fund’s current performance deviates from its average long-term performance. The larger the deviation, the more the fund can fluctuate and therefore the greater the risk involved. The risk class may change over time. Greater market volatility, for example, can lead to an effective increase in the funds' risk profiles.