A range of flexible fixed income solutions
Jupiter Dynamic Bond
If inflationary pressures continue to subside and recession takes hold, investments in bonds may benefit as that may trigger a fall in yields. As yields decline bond prices should rise as they move in inverse directions. Such an environment may be helpful for funds like the Jupiter Dynamic Bond fund. The investment management team for the fund currently supports a view of slowing inflation and lower growth in the coming months.
Jupiter Strategic Absolute Return Bond Fund
In order to navigate the ups and downs of the market, you need to be flexible and the portfolio needs to be rejigged constantly. In 2022, the steep and rapid rise in interest rates roiled the fixed income and equity markets. Elevated inflation could pose many challenges, including eroding the value of money and depressing the price of existing bond holdings. In such a scenario, an unconstrained strategy with the ability to ‘go anywhere’ in the market may be popular. For example, the Jupiter Strategic Absolute Return Bond Fund invests primarily in bonds and similar debt instruments issued by governments and companies anywhere in the world. Portfolio construction is driven by an on-going assessment of the drivers of returns such as interest rates, bond prices, the economic outlook, inflationary expectations, and global political issues.
Jupiter Strategic Absolute Return Bond Fund
Sometimes it’s unclear what’s going to happen and even harder trying to make a prediction about the path inflation and global growth will take. The Jupiter Strategic Absolute Return Bond Fund invests primarily in bonds and similar debt instruments issued by governments and companies anywhere in the world. Portfolio construction is driven by an ongoing assessment of the drivers of returns such as interest rates, bond prices, the economic outlook, inflationary expectations, and global political issues.
Jupiter Financials Contingent Capital Fund
If inflation subsides enough to stop central banks from continuing to aggressively hike interest rates, a recession could be prevented, and economic growth could start picking up. In such an environment, a strategy that may be benefits is the Jupiter Financials Contingent Capital Fund. The strategy invests in CoCos, which are a type of security issued by banks and insurance companies. They were first issued after the financial crisis to ensure that financial institutions remained well-capitalised. In the last 10 years, banks have seen a significant improvement in their fundamentals, with reduced leverage, better asset quality and much stronger capital positions. We believe that Contingent Convertibles bonds are currently trading cheaply on a historical perspective and are attractive compared to the European and US “high yield” markets.
Jupiter Global High Yield Bond
High yield bonds typically provide a higher income than bonds that are considered less likely to default on their principal payment. Reduced demand in the economy or a recession could expose such bonds to higher risks as the revenue of companies issuing such bonds may suffer. Investments in such bonds therefore call for thorough research, which means sifting through the profile of thousands of companies operating in a range of geographies and sectors. Selection of assets that are most likely to maximise profits and minimize losses is crucial. The Jupiter Global High Yield Bond aims to achieve income and capital gain over a medium to long term by investing in such bonds.
Important information
Jupiter Dynamic Bond
The fund can invest a significant portion of the portfolio in high yield bonds and bonds which are not rated by a credit rating agency. While such bonds may offer a higher income, the interest paid on them and their capital value is at greater risk of not being repaid, particularly during periods of
changing market conditions. The value of quarterly income payments will fluctuate. In difficult market conditions, reduced liquidity in bond markets may make it harder for the manager to sell assets at the quoted price. This could have a negative impact on the value of your investment. In extreme market conditions, certain assets may become hard to sell in a timely manner or at a fair price. This could affect the Fund’s ability to meet investors’ redemption requests upon demand. Some share classes charge all of their expenses to capital, which can reduce the potential for capital growth. Please see the Prospectus for information. The KIID and Prospectus are available from Jupiter on request. This fund can invest more than 35% of its value in securities issued or guaranteed by an EEA state.
Jupiter Strategic Absolute Return Bond Fund
- 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.
- 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 – the Fund may hold investments with loss-absorbing features, including up to 20% in contingent convertible bonds (CoCos). These investments may be subject to regulatory intervention and/or specific trigger events relating to regulatory capital levels falling to a pre-specified 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.
- Currency risk – the Fund can be exposed to different currencies. The value of your shares may rise and fall as a result of exchange rate movements.
For a more detailed explanation of risks, please refer to the ‘Risk Factors’ section of the prospectus.
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