Fund Rationale: JP Morgan Global Bond Opportunities Sustainable Fund

JP Morgan Global Bond Opportunities Sustainable Fund (the “Fund”)
SGD Hedged Institutional Accumulation Shares (ISIN: LU2199324059)
Fund Manager Page
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Endowus have selected the Fund for its diversified exposure to global fixed income sectors, its dedication to integrate ESG in the investment process, and the team’s proven track record in managing a flexible fixed income strategy.

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Key Information

Fund Objective: Aims to achieve a return in excess of the benchmark by investing opportunistically in debt securities positively positioned towards debt securities issued by companies and countries that demonstrate effective governance and superior management of environmental and social issues (sustainable characteristics).

Suitability: Investors who seek investment return through an unconstrained exposure of Sustainable Debt Securities and currencies, understand that the portfolio may have significant exposure to higher risk assets (such as HY, EM debt and MBS/ABS) and are willing to accept those risks for potential higher returns, seek an investment that embeds ESG principles, and are looking to use the Fund as part of an investment portfolio and not as a complete investment plan.

Cost:
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* Total Fund-level Fees include fund management fee of 1.00%.
** Endowus do not charge a preliminary sales charge or any other additional fees, other than the all-in Endowus Access Fee.  

Fund Characteristics

Fund Inception: 8 November 2019
Share Class Inception: 30 July 2020
Benchmark: Bloomberg Barclays Multiverse Index

Fund AUM: SGD 1.0bn
Source: MorningStar as of 8 March 2021. Please refer to the FMC page for the most updated AUM.

🌱EU SFDR Rating: Article 8
Article 8 Funds promote environmental and/or social characteristics, and follow good governance practices. Please refer to “Sustainable Investing Methodology” below for more information.

Regional Allocation:

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Sector Allocation:

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Source: MorningStar as of 31 January 2021. Allocation data indicate actual exposure as a percentage of the Fund's total Net Asset Value. Please refer to the Fund Manager Page for the most updated information on Fund Holdings and Breakdown.

Selection Criteria

Endowus have selected the JP Morgan Global Bond Opportunities Sustainable Fund for its diversified exposure to global fixed income sectors, its dedication to integrate ESG in the investment process, and the team’s proven track record in managing a flexible fixed income strategy. The Fund is mandated to flexibly invest across 15 fixed income sectors across 50 countries, including government bonds, investment grade, high yield corporate bonds, emerging market debt, and securitised assets. The Fund’s broad exposure together with its integration of ESG consideration make it a unique offering on the market. 

We see a strong commitment and well-developed governance and ESG integration framework from JP Morgan. ESG is a strategic imperative that has been implemented methodically across each sector team. At the highest level, all analysts across fixed income sectors incorporate ESG factors within the existing omnibus research framework. JP Morgan have developed a materiality matrix that highlights the key ESG related risk factors across all fixed income markets to guide analysts’ research efforts. Each sector team then take a tailored approach in their respective sector. The Fund applies a norms- and value-based negative screening to avoid names in sectors such as fossil fuel and violators of UN Global Compact, and participate in ESG-linked issues such as green bonds and social bonds. It maintains a sustainability profile of the portfolio that is better than the universe. 

The strategy is co-managed by JP Morgan’s Global CIO, Bob Michele, and International CIO, Iain Stealey. They are responsible for the top-down asset allocation, while there are 4 other co-managers responsible for bottom-up security selection, supported by over 250 sector specialists in JP Morgan. The same team have been managing JP Morgan’s Global Bond Opportunities strategy since 2009, and have delivered superior risk adjusted performance relative to their peers in the “global flexible bond” category in Morningstar.

🌱Sustainable Investing Methodology

JP Morgan Global Bond Opportunities Sustainable Fund has been classified as an Article 8 Fund under the EU Sustainable Finance Disclosure Regulation (SFDR). Article 8 Funds promote environmental and/or social characteristics, and follow good governance practices. 

The Fund seeks to invest in issuers with effective governance and superior management of environmental and social issues. Superior management of environmental and social issues with effective governance is based on considerations of an issuer’s management of certain issues which may include resources (water, energy etc.), toxic emissions, carbon emissions, waste management, environmental damage, historic environmental record, a company’s disclosure on sustainability, labour safety issues, labour relations, supply chain issues, product safety or mis-selling, diversity / independence of the board of directors, fraud and accounting practices, ownership structure and data privacy. In addition, unemployment, education, poverty, gender equality and corruption may be considered for sovereigns.

The Fund incorporates ESG considerations throughout the investment process to gauge the Environmental and Social credentials of a company and/or issuer. ESG data and company engagement notes (if obtained) are incorporated into investment management analysis to provide visibility of an issuer's ESG characteristics and facilitate incorporation by the investment team at every stage of the decision-making process.

The Fund applies a rigorous and systematic approach to due diligence on the underlying issuers and/or potential issuers. The Fund takes a distinguished approach to assessing ESG factors in each sector of the bond market, given the inherent differences (countries vs. companies, emerging markets vs. developed markets, etc.), through proprietary research, engagement and portfolio construction.

ESG characteristics are monitored on an ongoing basis based on a combination of quantitative ESG data from third-party providers and qualitative research from research analysts, which is based on a variety of inputs.

The Fund uses both proprietary and third-party research to evaluate the ESG characteristics of the issuers purchased including company regulatory filings, company annual reports, company websites, direct and regular communication with companies, media, third-party research & data providers and government officials, economic surveys and reports. Data from these and other sources is used as inputs into proprietary scoring models to contribute to informing investment decisions.

Company engagement is used to develop an understanding of businesses and to drive change in the pursuit of better sustainable outcomes. Engagements are conducted through various means and establish an ongoing dialogue with the relevant company in relation to environmental and social matters.

The Fund portfolio reflects many of the shared environmental, social and governance values of investors through the exclusion of certain industries and companies engaged in specific activities. The Fund fully excludes certain industries and applies maximum revenue and/or production percentage thresholds to others. The Fund also fully excludes companies which are in violation of the UN Global Compact.

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Updated by Endowus: March 2021

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