JPMorgan Multi-Asset Growth & Income plc (LON:MATE) published their commentary for December 2021.
Month in review
The trust delivered a positive return on net assets in December.
Our bespoke equity sleeve – which is run by the JPMAM International Equity Group – provided the biggest positive contribution. Our regional positioning through index futures in North America and Japan was also additive to absolute performance. In contrast, European equity exposure detracted. From an asset allocation perspective, we continued to hold significant equity exposure. We increased our European small cap position and added to our US equity exposure due to the strong earnings quality of companies in the region. Finally, given concerns around the spread of Omicron and potential economic restrictions, we lowered UK equity exposure.
In fixed income, returns were flat in aggregate, with high yield and emerging market debt providing positive contributions to absolute returns.
Our convertible bond fund holding posted a negative return in absolute terms and lagged the market.
Looking ahead
We retain our constructive economic outlook, despite concerns around the Omicron variant. We acknowledge that the first quarter of 2022 could be challenging as the continued pandemic-related restrictions could lead to disappointing economic data. However, over a longer horizon, the prospect of another year with above-trend GDP growth and rising corporate earnings supports our pro-risk tilt in portfolios, while we continue to monitor inflation and normalising monetary and fiscal policy.
With rising interest rates, we will remain mindful of the value/growth rotation within equities. Despite a moderately higher interest rate outlook, real yields are likely to remain negative, which firstly favours our pro-risk stance, and secondly means we prefer credit to government bonds. Within credit, high yield will offer decent carry, and default rates remain low.
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.
