Our outlook doesn’t change with the calendar. The portfolio stays fairly consistent, and that is because as investors we take a longer-term view.
When talking about 2025, we would avoid making broad market predictions, but we can make some assumptions. For example, it’s likely that geopolitical tensions will remain elevated and could deteriorate further. However, we do see the tech sector as a bright spot as it remains in an AI-led structural upturn. We don’t know for sure what is going to happen to the US economy in 2025. There will be two-way pulls from the recent increase in the US dollar and bond yields impinging on credit costs on one hand and the likely cuts to taxes and deregulation on the other. It’s likely that while inflationary pressures have eased, higher import tariffs could slow progress here.
Higher tariffs to spoil the party?
We will have to see whether higher tariffs are placed on goods imported by the US from countries across Asia, or just China. Overall, we are feeling reasonably positive and would expect to see some level of earnings and dividend growth in 2025 in the Asia Pacific region. We think that the Australian, Indian and Singapore economies are likely to continue to see growth and to outperform peers. As we noted above, we have a high degree of confidence in the technology sector and in the tech companies that we own, which are primarily Taiwan-listed. We believe these companies are trading at attractive valuations, not only on an absolute basis, but also on a relative basis when compared to many US large-cap tech stocks.
Tech & tools
We have a diversified portfolio which we think can do relatively well regardless of whether global growth falters, or not. We try to manage the strategy so that under a broad range of scenarios we should be able to perform, regardless, of which investment style is in vogue or what the interest rate or economic outlook may be. And we have that diversity within the portfolio, e.g. a defence business, a gold miner and telecom, utility and consumer staples companies. We would expect these businesses to be more insulated from events outside the region. The more global companies, including a maker of power tools and the five technology companies that we hold, will probably benefit if the US economy and demand remains strong.
Avoiding China
We will continue to avoid investing in mainland China because we think the political system, geopolitical risks and the state of the economy make the market unattractive. We think that geopolitical tensions between China and the US, Europe and some Asian nations could worsen.
We believe that investing in quality, growing, income-producing companies in the Asia Pacific region, businesses that can provide revenue growth alongside high and sustainable or growing dividends, is the best way to generate attractive total returns over the longer term. That is not going to change with the calendar either.
Fund risks
- Currency (FX) Risk - The strategy can be exposed to different currencies and movements in foreign exchange rates can cause the value of investments to fall as well as 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.
- Market Concentration Risk (Geographical Region/Country) - Investing in a particular country or geographic region can cause the value of this investment to rise or fall more relative to investments whose focus is spread more globally in nature.
- Market Concentration Risk (Number of holdings) - The strategy holds a relatively small number of stocks and may therefore be more exposed to under-performance of a particular company or group of companies compared to a portfolio that invests in a greater number of stocks.
- Derivative risk - the strategy may use derivatives to reduce costs and/or the overall risk of the strategy (this is also known as Efficient Portfolio Management or "EPM"). Derivatives involve a level of risk, however, for EPM they should not increase the overall riskiness of the strategy.
- Liquidity Risk (general) - During difficult market conditions there may not be enough investors to buy and sell certain investments. This may have an impact on the value of the strategy.
- Counterparty Risk - the risk of losses due to the default of a counterparty e.g. on a derivatives contract or a custodian that is safeguarding the strategy’s assets.
- Charges from capital - All of the strategy’s charges are taken from capital. Should there not be sufficient capital growth in the Fund this may cause capital erosion.
- Stock Connect Risk - Stock Connect is governed by regulations which are subject to change. Trading limitations and restrictions on foreign ownership may constrain the Fund's ability to pursue its investment strategy.
The value of active minds: independent thinking
A key feature of Jupiter’s investment approach is that we eschew the adoption of a house view, instead preferring to allow our specialist fund managers to formulate their own opinions on their asset class. As a result, it should be noted that any views expressed – including on matters relating to environmental, social and governance considerations – are those of the author(s), and may differ from views held by other Jupiter investment professionals.
Important information
This document is intended for investment professionals and is not for the use or benefit of other persons. This document 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. The views expressed are those of the individuals mentioned at the time of writing, are not necessarily those of Jupiter as a whole, and may be subject to change. This is particularly true during periods of rapidly changing market circumstances. Every effort is made to ensure the accuracy of the information, but no assurance or warranties are given. Issued in the UK by Jupiter Asset Management Limited (JAM), registered address: The Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ is authorised and regulated by the Financial Conduct Authority. Issued in the EU by Jupiter Asset Management International S.A. (JAMI), registered address: 5, Rue Heienhaff, Senningerberg L-1736, Luxembourg which is authorised and regulated by the Commission de Surveillance du Secteur Financier. No part of this document may be reproduced in any manner without the prior permission of JAM/JAMI.