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Management, volatility control and flexibility recognised
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Reducing exposure to global bond markets in the current environment could be costly
According to Old Broad Street Research Ltd (OBSR), flexibility, low volatility and the experience of the portfolio managers have contributed to the recent A rating awarded to the JPM Strategic Bond fund by the fund research group. The £350 million fund has returned 26.14% since inception in May 2009 with an average volatility of 3.54 against the sector average of 4.24. The fund is also currently yielding 3.75%*.
Jasper Berens, Head of UK Intermediary Sales at J.P. Morgan Asset Management commented: "This marks a great start to the year and we're very pleased OBSR has recognised the qualities that make the fund unique and highly successful. The JPM Strategic Bond fund is a global best ideas fund, presenting investors with an ideal opportunity to capitalise on fixed income returns whilst keeping volatility low, particularly in comparison to the majority of other funds in the sector. This fund offers a perfect solution to investors looking to diversify their fixed income exposure without having to make the difficult asset allocation decisions in volatile market conditions.
"2011 was a difficult year for investors with continued market volatility and low interest rates, and while the outlook is not dramatically different at the start of 2012, the dynamic asset allocation of the JPM Strategic Bond fund means the fund can respond quickly to shifting market conditions."
In awarding the A rating, OBSR particularly recognised the strengths of the fund's management; Bob Michele, Global Chief Investment Officer for fixed income, and Nick Gartside, International Chief Investment Officer for fixed income, have 44 years of industry experience between them. OBSR also acknowledged the flexible approach of the fund, with the aim to outperform cash by an average of 3%. Finally, the fund and its managers were noted as having a strong awareness of the level and appropriateness of the risks in the portfolio at any one time.
Commenting on the outlook for fixed income markets, Nick Gartside, Portfolio Manager of the JPM Strategic Bond fund said: "In this deflationary, low growth environment, fixed income returns are likely to continue to provide positive surprises. Anaemic growth and record low interest rates will also place an increased emphasis on the search for securities that offer attractive yields. If we are taking Japan as our ‘roadmap,' experience suggests that reducing exposure to global bond markets in the current environment could be costly.
"At the moment, attractive fixed income opportunities can be found in selected sovereigns, particularly Australia, and in corporate credit, particularly high yield. We also think the US mortgage market provides a further good source of value for investors in both agency and select non-agency securities. We continue to like emerging market debt and emerging market currencies, particularly on a long-term basis, although the short-term dynamics are less supportive."
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