Talking Factsheet
GOVE: easy access to sovereign bond expertise
Matt Morgan and Vikram Aggarwal discuss the Jupiter Global Government Bond Active UCITS ETF.
Investors are increasingly looking for convenient and simple ways to put their savings to work. They also expect real time information. Exchange Traded Funds, or ETFs, offer a number of advantages including immediate availability, transparency and liquidity. Investors can buy or sell ETFs on a stock market at any time during market trading hours, just like shares. Most ETFs historically have been passive, but you won't find any of those at Jupiter, passive ETFs set out to achieve nothing more than tracking or mirroring the performance of an index.
At Jupiter, we believe in active investment. Our team's tried and trusted investment capabilities offer the potential, over time, to outperform an index. A Jupiter ETF is an active ETF. Bonds can be particularly difficult for many investors to buy directly, so the first active ETF we have launched is a Jupiter Global Government Bond Active UCITS ETF. Its market ticker is GOVE. It is managed by Jupiter's fixed income team, with Vikram Aggarwal leading the strategy who's been with Jupiter since 2013.
The Jupiter Global Government Bond Active UCITS ETF, or GOVE, to call it by its ticker, gives investors easy access to a diversified portfolio of global sovereign bonds. As Matt said, it is actively managed and aims to deliver superior returns versus global sovereign bonds, which we believe is achievable with a similar degree of volatility. Diversification can benefit investor portfolios.
GOVE is expected to have low correlation with equities and other risky assets. Our aim is to fulfill the traditional role of sovereign bonds within a client's multi-asset portfolio. As Matt said, GOVE is not passive nor is it "shy active" or a closet tracker. It is fully active. It is contrarian. Our approach is to start with an allocation to develop market sovereign bonds and then diversify into emerging markets.
We research which macro regime the global economy is in. We then compare that to the macro regime that has the highest probabilities assigned to it by market pricing and by investor positioning. When the divergence between those three is the largest, that provides us with the greatest investment opportunities. GOVE's contrarian and unconstrained approach aims to add diversification to a portfolio.
Jupiter has a long and successful history in active management. We have deep investment expertise across all major asset classes, and we have a wide range of capabilities. We believe in active management. Investment is too important to our clients futures to mirror an index or to follow the herd. It demands informed investment decision making based on rigorous analysis and painstaking research.
Why global sovereign bonds?
Sovereign bonds are debt securities issued by governments worldwide. They are generally considered to be among the safest investments, as governments may be less likely to default on their debts than corporations. The level of risk and potential for returns varies greatly between countries, depending on how investors perceive their creditworthiness.
Complexity
The sovereign (or government) bond market is vast and complex, with numerous issuers, differing maturities, and currencies. Active management can help investors navigate this complexity and identify opportunities that may be overlooked by passive strategies.
Macroeconomic sensitivity
Sovereign bonds are highly sensitive to macroeconomic factors, such as interest rates, inflation, and economic growth. Active managers can leverage their expertise to anticipate and position portfolios accordingly, potentially outperforming passive benchmarks.
Market inefficiencies
Unlike equity markets, which are often more efficient, the bond market can exhibit inefficiencies due to the complexity of instruments and presence of market participants with no profit target (e.g. central banks). Active managers can exploit these inefficiencies to generate alpha (outperformance).
Active ETFs
An ETF, or Exchange-Traded Fund, is a type of investment fund that trades on an exchange, just like a share. Traditionally, they have been used to enable investors to track a specific index, such as the S&P 500, in a cost-efficient manner. Unlike passive tracker funds, Active ETFs are actively managed by fund managers, who make investment decisions, with an aim to generate higher returns and outperform their benchmark.
Jupiter Global Government Bond Active UCITS ETF (GOVE)
What is GOVE?
Jupiter Global Government Bond Active UCITS ETF (or GOVE, to call it by its market ticker) is a global diversified portfolio of government bonds with exposure across developed markets and emerging markets (local and hard currency).
What is the objective?
The fund aims to achieve income and capital growth over the medium to long term, outperforming global government bond markets with a similar degree of volatility*.
How do we aim to achieve the target?
Active and flexible exposure across the full universe of government bonds. Exploit opportunities offered by interest rates, government bonds with spread and currencies.
*Secondary objective not officially stated in the prospectus. Global Government Bond markets are represented by the benchmark, the Bloomberg Global Aggregate Treasuries Index (USD Hedged).
- Market ticker: GOVE
- Structure: Irish UCITS ETF
- Benchmark: Bloomberg Global Aggregate Treasuries Index (USD Hedged)
- Base currency: USD
- Government/Supr./Gov. Guaranteed: Min 70%
- Duration: Benchmark +/- 3 years
- High Yield: Max 30%
- Unrated securities: Max 10%
- Securitised: Max 20%
- Distressed: Max 10%
- Maximum active FX exposure: No limit but expected below +/- 30% net currency exposure
Why Jupiter for Global Sovereign Bonds?
Multi-year track record of investing in sovereign fixed income
Jupiter has a long history in active fund management, with investment expertise across all major asset classes.
We have no house view, and our investment managers have complete independence to follow their own investment philosophy. We truly believe in the value of active minds with an aim to generate outperformance for our clients. Jupiter has been active across sovereign bond markets for more than 15 years, with meaningful investments in the space via multi- sector fixed income and government bond strategies.
Focused
A dedicated investment vehicle for investors to access Jupiter’s expertise in sovereign fixed income
Multi-year track record
Multi-year track record of investing in sovereign fixed income in our flagship bond funds
Deep experience
Experience with a variety of idiosyncratic sovereign debt situations
More than $5bn
currently invested in sovereign fixed income across Jupiter’s fund range
Meet the team
Vikram is an Investment Manager in the Fixed Income team, focusing on sovereign and emerging market debt. Since July 2020, he has been the lead investment manager on the Jupiter Global Sovereign Opportunities Fund (SICAV). Since July 2017 he has been supporting the Jupiter Multi-Sector Fixed Income Team (Ariel Bezalel and Harry Richards) in the management of Jupiter Multi-Sector Fixed Income accounts, including the Jupiter Strategic Bond Fund (Unit Trust) and Jupiter Dynamic Bond Fund (SICAV).
Prior to joining Jupiter, Vikram began his career at Bank of America Merrill Lynch where he spent four years as a European credit trader. Vikram has an MA in economics and management from Oxford University.
Fund specific risks
- Currency (FX) Risk - The Fund can be exposed to different currencies and movements in foreign exchange rates can cause the value of investments to fall as well as rise.
- Share Class Hedging Risk - The share class hedging process can cause the value of investments to fall due to market movements, rebalancing considerations and, in extreme circumstances, default by the counterparty providing the hedging contract.
- Interest Rate Risk - The fund can invest in assets whose value is sensitive to changes in interest rates (for example bonds) meaning that the value of these investments may fluctuate significantly with movement in interest rates e.g. the value of a bond tends to decrease when interest rates rise.
- Pricing Risk - Price movements in financial assets mean the value of assets can fall as well as rise, with this risk typically amplified in more volatile market conditions.
- Emerging Markets Risk - Emerging markets are potentially associated with higher levels of political risk and lower levels of legal protection relative to developed markets. These attributes may negatively impact asset prices.
- Contingent convertible bonds - The fund may invest in contingent convertible bonds. These instruments may experience material losses based on certain trigger events. Specifically these triggers may result in a partial or total loss of value, or the investments may be converted into equity, both of which are likely to entail significant losses.
- Credit Risk - The issuer of a bond or a similar investment within the fund may not pay income or repay capital to the Fund when due.
- Derivative risk - the Fund may use derivatives to generate returns and/or to reduce costs and the overall risk of the Fund. Using derivatives can involve a higher level of risk. A small movement in the price of an underlying investment may result in a disproportionately large movement in the price of the derivative investment.
- Counterparty Default Risk - The risk of losses due to the default of a counterparty on a derivatives contract or a custodian that is safeguarding the fund's assets.
- Sub investment grade bonds - The fund may invest a significant portion of its assets in securities which are those rated below investment grade by a credit rating agency. They are considered to have a greater risk of loss of capital or failing to meet their income payment obligations than higher rated investment grade bonds
Important Information
This is a marketing communication. Please refer to the latest sales prospectus of the sub-fund and to the Key Investor Information Document (KIID) (for investors based in the UK) and Key Information Document (KID) (for investors based in the EU), particularly to the sub-fund’s investment objective and characteristics including those related to ESG (if applicable), before making any final investment decisions.
This material is for informational purposes only and is not investment advice. Market and exchange rate movements can cause the value of an investment to fall as well as rise, and you may get back less than originally invested.
Information in this material has been obtained or derived from sources believed to be reliable and current. However, accuracy or completeness of the sources cannot be guaranteed.
Investors must buy and must usually sell shares in the sub-fund on a secondary market with the assistance of an intermediary (e.g. a stockbroker) and may incur fees for doing so. In addition, investors may pay more than the current net asset value when buying shares and may receive less than the current net asset value when selling them.
This is not an invitation to subscribe for shares/ units in HANetf ICAV (the ‘ICAV’), an investment company with variable capital established as an umbrella fund with segregated liability between sub-funds which is authorised and regulated by the Central Bank of Ireland pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011, as amended. Registered in Ireland under reference number C178625. Registered office: 55 Charlemont Place, Dublin, D02 F985, Ireland.
HANetf Management Limited (the “Manco”) acts as the management company of the ICAV. The Manco is registered in Ireland (company number: 621172) and authorised and regulated by the Central Bank of Ireland (reference number: C178709).
The Manco has delegated investment management of the sub-fund to Jupiter Asset Management Limited which is authorised and regulated by the Financial Conduct Authority (number: 141274).
This information is only directed at persons residing in jurisdictions where the Company and its shares are authorised for distribution or where no such authorisation is required. The Manco may terminate marketing arrangements. The sub fund may be subject to various risk factors, please refer to the latest sales prospectus for further information.
Tax treatment of the sub-fund depends on the individual circumstances of each investor.
Prospective purchasers of shares of the sub-fund should inform themselves as to the legal requirements, exchange control regulations and applicable taxes in the countries of their respective citizenship, residence or domicile. ETF purchases can only be made on the basis of the latest sales prospectus and Key Investor Information Document (KIID) (for investors based in the UK) and Key Information Document (KID) (for investors based in the EU), accompanied by the most recent audited annual report and semi-annual report. These documents and information related to investor rights and complaints handling are available for download from www.hanetf.com or can be obtained free of charge upon request from: complaints@hanetf.com.
Past performance does not predict future returns.
Issued in the UK by Jupiter Asset Management Limited (registered address: The Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ) which is authorised and regulated by the Financial Conduct Authority. Issued in the EU by Jupiter Asset Management International S.A. (registered address: 5, Rue Heienhaff, Senningerberg L-1736, Luxembourg) which is authorised and regulated by the Commission de Surveillance du Secteur Financier.
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