Challenge
High yield bonds are typically considered riskier than higher-rated investment grade bonds. Credit selection based on intensive research and risk awareness are key to preserve capital and avoid drawdown risk. Is it possible to balance risks and returns and still achieve consistent alpha generation?
Solution
Active management of a portfolio rooted in a clear investment philosophy is one of the ways by which strong risk-adjusted returns could be generated. Credit selection for the Global High Yield Bond portfolio is based on intensive research. Our fund positioning reflects our evolving views of a changing world, and we believe that capital must be preserved, and idiosyncratic drawdown risk avoided.
The two charts below show we have a track record of outperforming the benchmark even while keeping the volatility low.
From August 2019 through September 2024, the fund has proved that it can keep volatility significantly lower than the benchmark. The higher Sharpe ratio and Sortino ratio in the graphic below show that the fund risk metrics were far better than the benchmark, the ICE Bofa Global High Yield Constrained.
Risk Performance
Jupiter Global High Yield
Benefits
- Consistent generation of risk-adjusted returns
- Lower volatility
As of 30/11/2024 | Dec 2019 - Nov 2020 | Dec 2020 - Nov 2021 | Dec 2021 - Nov 2022 | Dec 2022 - Nov 2023 | Dec 2023 - Nov 2024 |
|---|---|---|---|---|---|
Fund
|
5.26%
|
8.52%
|
-8.50%
|
10.06%
|
11.11%
|
Benchmark
|
-0.41%
|
0.34%
|
-12.19%
|
6.48%
|
11.35%
|
Morningstar sector
|
2.56%
|
2.90%
|
-10.39%
|
5.70%
|
9.82%
|
Fund specific risks
- 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.
- 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 reduce costs and/or the overall risk of the Fund (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 Fund.
- 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.
- Charges from capital - Some or all of the Fund’s charges are taken from capital. Should there not be sufficient capital growth in the Fund this may cause capital erosion.
For a more detailed explanation of risk factors, please refer to the "Risk Factors" section of the Scheme Particulars.
Important Information
This document is intended for investment professionals and is not for the use or benefit of other persons, including retail investors.
This is a marketing communication. Please refer to the latest sales prospectus of the sub-fund and to the Key Information Document (KID) (for investors in the EU)/ Key Investor Information Document (KIID) (for investors in the UK), particularly to the sub-fund’s investment objective and characteristics including those related to ESG (if applicable), before making any final investment decisions.
An investment constitutes the acquisition of shares in the sub-fund, not in the sub-fund’s underlying assets. We recommend you discuss any investment decisions with a financial adviser, particularly if you are unsure whether an investment is suitable. Jupiter is unable to provide investment advice. This communication 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. Initial charges are likely to have a greater proportionate effect on returns if investments are liquidated in the shorter term. Past performance is not a guide to future performance. Company/Holding/Stock examples are for illustrative purposes only and are not a recommendation to buy or sell. Quoted yields are not a guide or guarantee for the expected level of distributions to be received. The yield may fluctuate significantly during times of extreme market and economic volatility. Awards and Ratings should not be taken as a recommendation. Every effort is made to ensure the accuracy of the information provided but no assurance or warranties are given. This is not an invitation to subscribe for shares in the Jupiter Asset Management Series plc (the Company). The Company is 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 registration number 271517. Registered office: 33 Sir John Rogerson’s Quay, Dublin 2, Ireland. The sub fund may be subject to various other risk factors, please refer to the latest Prospectus for further information. Prospective purchasers of shares of the sub fund of the Company should inform themselves as to the legal requirements, exchange control regulations and applicable taxes in the countries of their respective citizenship, residence or domicile. Subscriptions can only be made on the basis of the latest Prospectus and the Key Information Document (KID/ Key Investor Information Document (KIID), accompanied by the most recent audited annual report and semi-annual report. These documents are available for download from www.jupiteram.com. The Manager may terminate marketing arrangements. Information on sustainability-related aspects is available from www.jupiteram.com.
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 or JAMI.