Challenge
Inflation volatility has made the interest rate outlook increasingly uncertain. How can investors improve their risk-adjusted returns in fixed income portfolios in this new landscape?
Solution
Generating positive returns and keeping volatility under control are important characteristics of any absolute return fixed income fund. The Jupiter Strategic Absolute Return Bond (SARB) fund allocates assets dynamically depending on the macro environment and has a track record of delivering positive total returns on a rolling twelve-month period.
The chart above shows investors were better off investing in SARB than a long only fixed income fund represented by the Bloomberg Global Aggregate Index. Data going back to April 2018 shows that the fund made negative returns only 2.7% of the period on a 12-month rolling basis, compared to 33.4% for the comparator index.
Although both the fund and the index achieved a similar level of volatility during the period, the fund’s worst performance of -1.35% pales in comparison to the -13.39% of the index, firmly establishing SARB’s reliability to investors.
SARB can help improve fixed income return profiles when blended with traditional bond exposures.
| As of 30/11/2024 | Dec 2014 - Nov 2015 | Dec 2015 - Nov 2016 | Dec 2016 - Nov 2017 | Dec 2017 - Nov 2018 | Dec 2018 - Nov 2019 | Dec 2019 - Nov 2020 | Dec 2020 - Nov 2021 | Dec 2021 - Nov 2022 | Dec 2022 - Nov 2023 | Dec 2023 - Nov 2024 |
| Fund | -4.81% | 3.36% | 3.46% | -0.80% | 7.14% | 9.60% | 1.29% | 5.47% | 1.60% | 3.16% |
| Benchmark | 0.36% | 3.28% | 1.85% | 1.75% | 2.22% | 0.51% | 0.08% | 1.29% | 4.92% | 5.28% |
Past performance does not predict future returns. Returns may increase or decrease as a result of currency fluctuations. The performance data shown does not take account of the commissions and costs incurred on the issue and redemption of units. Source: Morningstar UK Limited via FactSet. All Rights Reserved. Fund performance data is calculated on a NAV to NAV basis, income reinvested, net of fees.
Benefits
- Better risk-adjusted returns
- Low drawdown profile
Fund specific risks
- Investment risk - while the Fund aims to deliver above zero performance irrespective of market conditions, there can be no guarantee this aim will be achieved. Furthermore the actual volatility of the Fund may be above or below the expected range, and may also exceed its maximum expected volatility. A capital loss of some or all of the amount invested may occur.
- Currency risk - the Fund is denominated in USD but holds assets denominated in other currencies. The value of your shares may rise and fall as a result of exchange rate movements.
- Emerging markets risk - less developed countries may face more political, economic or structural challenges than developed countries.
- 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. Bonds which are rated below investment grade are considered to have a higher risk exposure with respect to meeting their payment obligations.
- CoCos and other investments with loss-absorbing features - these investments may be subject to regulatory intervention and/or specific trigger events relating to regulatory capital levels falling to a prespecified point. This is a different risk to traditional bonds and may result in their conversion to company shares, or a partial or total loss of value.
- Bond connect risk - the rules of the Bond Connect scheme may not always permit the Fund to sell its assets, and may cause the Fund to suffer losses on an investment.
- Interest rate risk - investments in bonds are affected by interest rates and inflation trends which may affect the value of the Fund.
- Liquidity risk - some investments may become hard to value or sell at a desired time and price. In extreme circumstances this may affect the Fund's ability to meet redemption requests upon demand.
- Derivative risk - the Fund uses 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. Derivatives also involve counterparty risk where the institutions acting as counterparty to derivatives may not meet their contractual obligations.
- Sustainability Article 8 - Investments are selected or excluded on both financial and non-financial criteria. The Fund's performance may differ from the broader market or other Funds that do not utilize ESG criteria when selecting investments. 1 For a more detailed explanation of risks, please refer to the "Risk Factors" section of the prospectus
Important Information
This marketing document is intended for investment professionals and is not for the use or benefit of other persons.
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 and JAMI.