JPMorgan’s Global Bond Opportunities strategy benefits from an experienced management team, the firm’s wider resources and a flexible and nimble investment process.
The Morningstar Analyst Rating for the fund’s cheapest R6 share class is upgraded to Silver from Bronze. Other share classes are rated between Bronze and Neutral, depending on fees.
Global fixed-income CIO Bob Michele and international fixed-income CIO Iain Stealey comanage the strategy, backed by a well-resourced and experienced team. In light of their contributions to idea-generation and returns, four comanagers were added to the strategy in July 2020: Lisa Coleman, head of global investment-grade corporate credit, who joined in 2008; Andrew Headley, head of securitized strategies, who joined in 2005; Jeff Hutz, a high-yield portfolio manager, who joined in 2004; and Diana Amoa, an emerging-markets portfolio manager who joined the team in 2015, but left in April 2021.
The strategy aims to maximise total return with a 5%-10% volatility target which allows the team considerable flexibility in investing in a variety of sectors, such as high-yield and investment-grade corporates, emerging markets, and securitised debt. Macro decisions are the dominant driver of the process. The comanagers and sector team heads debate the macro environment at quarterly meetings, which define the team’s top-down investment roadmap. During the weekly sector team meetings, fundamental, quantitative, and technical research inputs are generated for every sector, which help fine-tune the asset allocation.
For most of the time since inception, the large stake in high-yield debt has ranged between 35% and 65%, across corporate credit, emerging-markets exposure (government bonds and corporates), and securitized, and has been beneficial in a generally benign market environment. This flexibility has seen the team exercise sound judgment in reducing that stake when valuations are less compelling, and make use of the wider tools available. This gives confidence in the team’s ability to proactively reduce risk and modify exposure levels in market stress periods.
From inception in 2012 through March 2022, the fund has outperformed its peers and category index in absolute and risk-adjusted terms. The strategy held up better than most during the most recent sharp credit selloffs. One example is early 2020 when the team cut its high-yield and emerging-markets exposure, increased duration, and added value with tactical currency trades. In first-quarter 2022 it outperformed as short exposure to government bonds and a hedging position in Russian CDS contributed.