LONDON: J.P. Morgan Asset Management launches Diversified Real Return Fund

May 01, 2012

London, 1 May 2012: The 5 April deadline for investing one’s annual Individual Savings Account (ISA) allowance has given rise to an ISA ‘season’, where banks, building societies and investment houses vie with each other to persuade investors to top up or open accounts before the tax year turns and the allowance is lost.

With returns on risk-free assets still at historic lows and inflation remaining above target in the UK, those saving for, or already in retirement, are increasingly concerned about how to safeguard the value of the funds they have built up. Today, J.P. Morgan Asset Management launches its JPM Diversified Real Return Fund to help investors achieve this aim. Based on a successful strategy launched by the firm’s Global Multi-Asset Group (GMAG) in the US in 2011, the new fund will blend inflation-linked bonds with real assets and inflation-sensitive equities to produce a portfolio that can outperform inflation and provide a positive return in a range of inflationary or economic conditions.

The fund is structured as an OEIC under the UCITS rules and is registered for sale in the UK and Jersey. At launch it will offer an A share class with a minimum investment of £1,000 lump sum or £100 a month. J.P. Morgan Asset Management anticipates the product will initially be of most interest to individuals saving for retirement in pension or other savings products. Institutional share classes suitable for pension scheme clients and other institutional investors will come on stream over the coming months.

Whilst the fund’s official benchmark is the 1-10 Year Barclays Capital Index-Linked Gilts Index, the fund aims to achieve an annual return (before fees) of 3% in excess of the UK Retail Price Index, with 40-60% the volatility of equities. It will do this by investing in a blend of inflation-linked bonds, investment grade credit, inflation overlays, and real assets or their related equities. The GMAG team are active managers and will add value through strategic and tactical asset allocation and a ‘smart’ rebalancing strategy. The team has identified that the best portfolio returns while meeting the RPI + 3% target and minimising volatility can be achieved with a mix of around 65% lower-volatility assets (index-linked gilts, corporate bonds with inflation overlays and cash alternatives) and 35% higher-volatility assets (real estate investment trusts, commodities, natural resources equities and infrastructure equities).

John Stainsby, Head of UK Institutional at J.P. Morgan Asset Management, said: “The popularity of index-linked government bonds in the past few years of above-target inflation has driven yields down to extremely low levels. The JPM Diversified Real Return Fund has been designed for investors who want to diversify their exposure beyond index-linked bonds to other inflation-sensitive assets. Its ability to invest across many inflation-sensitive asset classes makes it appropriate for those who want to achieve real returns and recognise the problems that an inflationary environment can pose to long-term investors.”

John Stainsby added: “By using a strategic asset allocation framework, as well as shorter-term tactical calls, J.P. Morgan Asset Management’s experienced Global Multi-Asset Group is able to blend higher and lower-volatility assets to achieve the right balance between long-term growth and consistency of returns. Through a mix of inflation-sensitive bonds and real assets, the JPM Diversified Real Return Fund can produce a real return for investors with less reliance on equities, and less volatility as a result.”

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Notes to Editors

About J.P. Morgan Asset Management

J.P. Morgan Asset Management is part of JPMorgan Chase & Co. and is a global asset management leader providing world-class investment solutions to clients. With $1.4 trillion in assets under management (the Asset Management client funds of JPMorgan Chase & Co. as at 31 March 2012) and offices in 41 locations around the world, J.P. Morgan Asset Management offers global coverage with a strong local market presence, and leadership positions in most asset classes.

J.P. Morgan Asset Management is a trading name of J.P. Morgan Asset Management Marketing Limited, which has issued this material in the United Kingdom and which is authorised and regulated by the Financial Services Authority. Registered in England No. 288553. Registered office: 125 London Wall, London EC2Y 5AJ.

Any past performance referred to in this material is not a guide to future performance and the value of investments, and any income from them, can fall as well as rise. Any tax concessions referred to are not guaranteed and their value will depend on the individual circumstances of investors. Stock market linked investments carry a number of inherent risks. These risks will increase where fluctuations in exchange rates impact on the value of any underlying investments or where the investment is exposed to smaller companies or emerging markets. Investments in fixed income securities that are not rated as investment grade represent a greater risk to an investor’s capital.


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