Challenge
Credit turmoil triggered by unexpected events such as the COVID-19 pandemic or the US banking crisis in 2023 could potentially hurt performance of fixed income funds as they are always accompanied by a spike in volatility. How do you guard against such a scenario?
Solution
Top-down macroeconomic analysis and careful credit selection backed by in-depth analysis are very important to manage unexpected swings. The Jupiter Strategic Bond aims to maintain a balance between macro and credit risk, with long-term fundamental research underpinning the active views.
Monthly relative performance vs IA Sector* when HY spreads widened by 50 bps or more, last 10 years
The chart above shows, the strategy has been able to outperform the benchmark (IA £ Strategic Bond Sector) most of the times since the fund was launched whenever the Bloomberg Global High Yield Index spreads widened by 50 basis points or more.
Benefits
- Active management aims to guard against volatility that’s detrimental to performance.
- A consistent track record of outperformance during a credit turmoil.
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 | 2.65% | 6.99% | 5.35% | -2.15% | 10.53% | 5.02% | 1.14% | -13.96% | 1.23% | 8.11% |
| Benchmark | 1.40% | 5.40% | 6.06% | -2.02% | 8.81% | 5.58% | 1.71% | -11.14% | 3.72% | 9.02% |
Past performance is no guide to the future. Performance data is calculated bid to NAV or NAV to NAV dependent on the period, all performance is net of fees, inc. reinvested.
Fund specific risks
- 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 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 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 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.
For a more detailed explanation of risk factors, please refer to the "Risk Factors" section of the Scheme Particulars.
Important Information
This marketing 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 scheme particulars 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.
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. 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 communication is for informational purposes only and is not investment advice. 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. An investor should read The Key Investor Information Document (KIID) before investing in the Fund. The KIID, Supplementary Information Document and Scheme Particulars for the fund are available for download 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 No part of this document may be reproduced in any manner without the prior permission of JAM.