JPMorgan Multi-Asset Growth & Income plc (LON:MATE) published their commentary for January 2022.
Month in review
The trust delivered a negative return on net assets in January.
Our equity allocation contributed negatively to overall performance as equity markets declined, driven by concerns over inflation, central bank tightening and geopolitical tensions in Eastern Europe.
Our bespoke equity sleeve – which is run by the JPMAM International Equity Group – delivered a negative absolute return, but performed well ahead of broad equity markets.
Our regional positioning through index futures provided a flat contribution to the overall return. From an asset-allocation perspective, we trimmed our equity overweight in the portfolio by reducing our exposures in the US and Europe as we sought to take down the overall level of active risk in the portfolio amid heightened market volatility. We closed our US small-cap futures position and opened a position in Canadian futures driven by our positive view on Canadian equities in expectation of above-trend growth and strong earnings expectations.
Our fixed income exposure also provided a negative contribution to returns. We added to duration over the month via US 10-year government bond futures. We reduced our high yield exposure as we believe further spread tightening is likely be more limited as the Federal Open Market Committee has signalled a greater willingness to tighten policy.
Looking ahead
We believe risk assets will rally, despite the recent drawdown as we continue to maintain our constructive outlook on the global economic recovery. We expect the pandemic to retreat and pent-up consumer demand to continue to support risk assets, and for easing supply chain bottle necks to re-ignite global growth.
While central banks are looking to taper bond purchases at a faster pace as they battle escalating inflationary pressures, uncertainty around new Covid-19 variants, escalating geopolitical tensions and heightened market volatility are likely to keep them flexible in the path towards a tighter policy.
JPMorgan Multi-Asset Growth & Income plc (LON:MATE) combines sustainable income and capital growth from globally diversified investments. The Trust aims to achieve a long-term total return of 6% per annum and an initial annual dividend of 4% paid quarterly.
