JP Morgan Income Opportunity Fund

the aim is to deliver an absolute return above the cash benchmark, this means that investors might get slightly higher returns than holding in cash

It is becoming increasingly harder for investors to call a position on bonds. The argument is that the bull market that has been enjoyed, cannot continue and investors should be prepared for flat or negative returns moving forward. However, the market is not responding in a normalised fashion. In 2013 for example gilts were one of the worst performing asset classes, but against all market expectations they were one of the best in 2014.

Clearly investing in bonds is now much more complicated and volatile than ever before. But cautious investors continue to favour bonds to equities despite this uncertainty and volatility (or perhaps not realising it).

The options seem threefold – either an investor chooses a fixed interest sector they believe over the long term will do well (or a mixture of sectors), so high yield, government bond etc, they go to a strategic bond manager who takes that decision away from them or they go for an alternative strategy which may or may not include bonds.

The challenge with the third category is that the strategies can be complex, and often offer very little return. A fund which has been available since 2007 is the JP Morgan Income Opportunity Fund which aims to deliver positive returns above cash from a mixture of fixed income and currency markets. Returns over 1 year are flat but over three years it has returned 2.9% p.a. The share class of the fund we reviewed was launched in February 2008.

In this update we will touch on the manager and the fund. It is important to stress this is a complex strategy and might not appeal to all investors.

Fund Facts Morningstar


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