Markets are under constant evolution and traditional investing strategies are proving to be ineffective under certain circumstances. Challenge the status quo with the NBI Unconstrained Fixed Income Fund and consider a strategy that invests broadly across global fixed income markets and is not constrained by benchmark-specific guidelines.
Hear directly from Iain Stealey of J.P. Morgan as he reflects on Q3 2022
- Traditional active fixed income strategies seek to outperform their respective benchmarks by making tactical calls on both duration and sector positioning. However, margins to manoeuver are generally limited.
- Unconstrained fixed income strategies have greater flexibility when it comes to selecting and allocating securities, sectors and countries as they are not subject to restrictions related to a 'traditional' benchmark.
- The portfolio's duration can also be adjusted with greater flexibility than traditional fixed income strategies.
- Overall, an unconstrained approach can better react to market fluctuations. It also provides greater flexibility in generating positive absolute returns while managing risk in changing global markets.
Vast investment flexibility
- Investing broadly across global fixed income markets without the traditional benchmark-specific guidelines.
- High conviction ideas and attempts to achieve absolute risk-adjusted returns in a variety of environments.
- Integrated risk management.
Uncorrelated sources of return
- Better diversification, downside protection and returns stabilization by investing in uncorrelated assets to traditional risk assets.
- Derivatives and option-based strategies are used to generate long-term returns and protect the portfolio.
How to position an unconstrained fixed income fund in a portfolio?
The unconstrained approach allows the management team to avoid areas of the market posing greater downside risk and be more responsive to changes in markets. The portfolio is built by maintaining a stable, liquid assets base combined with a dynamic set of risk-mitigating and return-enhancing trades.
An unconstrained fixed income fund can be added to an existing core allocation, as a complement to traditional fixed income funds, due to its global exposure and potential for lower interest rate sensitivity.
- Diversification within fixed income allocation
- Alternative to passive fixed income strategies
- Hedge against rising rates
An unconstrained fixed income fund can be positioned as an alternative allocation due to its potential lower correlation to traditional stocks and bonds.
- Aim to generate alpha regardless of market conditions using broader opportunity set
- Targeting absolute return with focus on capital preservation
What are the benefits of investing in an unconstrained fixed income strategy?
Traditional fixed income may not be as compelling in a rising rate environment. With yields at historical lows and the unclear timing of rate hikes, investors need to consider investing in non-traditional strategies with greater flexibility to manoeuver in an increasingly complex market environment.
- Broader opportunity set and range of potential alpha sources
- Benchmark-agnostic: not constrained by a “traditional” fixed income benchmark
- More flexibility to take advantage of the best opportunities and adjust the portfolio to enhance returns and mitigate risk
- More leeway in terms of duration management which may help to attenuate interest rate risk, a distinctive advantage in a rising rate environment
- Low correlation to traditional and spread-oriented bond and equity indices
- Good complement to traditional fixed income and alternative strategies
- Consistent, attractive risk-adjusted returns in all market environments
- Integrated risk management process: focus on preserving capital and maximizing risk-adjusted returns
About the portfolio manager's firm
J.P. Morgan Asset Management is one of the largest asset and wealth managers in the world. As the asset management business of JPMorgan Chase & Co. (“JPMC”) and its affiliates, J.P. Morgan Asset Management* (“JPMAM”) is a leading asset manager for individuals, advisors and institutions. Their investment professionals are located around the world, providing strategies that span the full spectrum of asset classes.
Based in New York, JPMAM has offices in more than 20 countries and teams network across 15 cities worldwide, connected through investment hubs in London, New York, Tokyo and Hong Kong.
- Assets under management of JPMC: US$3 trillion
- Assets under management of JPMAM: US$1.7 trillion, including $US500 billion in fixed income securities
- JPMAM investment professionals: 82 investment teams and over 1,100 investment professionals, with 280 across all segments of the global fixed income universe
Learn about other investment solutions
NBI Global Tactical Bond Fund
The Fund is made up of high-quality global bonds, which provide more opportunities to generate added value because of their low correlation with other classes of fixed income assets.
The NBI Unconstrained Fixed Income Fund (the “Fund”) is offered by National Bank Investments Inc., a wholly owned subsidiary of National Bank of Canada. National Bank Trust Inc. acts as portfolio manager for the Fund and J.P. Morgan Investment Management Inc. (JPMIM), an indirect wholly owned subsidiary of JPMorgan Chase & Co. (JPMC), acts as portfolio sub-advisor for the Fund. J.P. Morgan Asset Management (JPMAM) is the brand name for the asset management business of JPMC and its affiliates.
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus of the Fund before investing. The Fund’s securities are not insured by the Canada Deposit Insurance Corporation or by any other government deposit insurer. The Fund is not guaranteed, its values change frequently and past performance may not be repeated.