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Investment Communication Skills May 2014 FOR PROFESSIONAL CLIENTS ONLY – NOT FOR RETAIL USE OR DISTRIBUTION.

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Presentation on theme: "Investment Communication Skills May 2014 FOR PROFESSIONAL CLIENTS ONLY – NOT FOR RETAIL USE OR DISTRIBUTION."— Presentation transcript:

1 Investment Communication Skills May 2014 FOR PROFESSIONAL CLIENTS ONLY – NOT FOR RETAIL USE OR DISTRIBUTION

2 Learning objectives To enhance investment communication skills and help clients with a deeper understanding of their investment goals Create client messages to help them understand the importance of a well balanced portfolio Communicate to clients that your investment strategies are designed to take best advantage of appropriate levels of risk.

3 A collection of easy to use charts on global markets –Designed to help you explain market events and economic data to your clients supporting their investment decision making A comprehensive information source –The guide provides a “go-to” source for market and economic information Timely and relevant –The guide is released at the beginning of each quarter Easy to use: “Simplify the Complex” –Most people are visual learners and the guide charts help to simplify complex concepts

4 How will this help my clients? I t generates messages that are simple without being simplistic It does not offer opinions by itself – it is an illustrative tool It provides clients with information to help them make more informed investment decisions It enhances advisers understanding of the implications of the wider economic backdrop and the influence this has on their clients portfolios It helps their clients avoid being too driven by short term market events Arms advisers with ideas and insights to be shared with their clients Guide to the Markets helps you to have more engaged in-depth conversations with clients helping to build stronger relationships with them:

5 Portfolio Discussions Two-page document primarily focused on specific asset classes, Used to articulate and support basic investment cases Leverages slides from the Guide as examples of discussion points with end clients

6 Portfolio Discussions Topics include Investing in Europe, Investing in the UK Emerging market equities

7 Quarterly Perspectives Quarterly review of four key topics related to high-level macro economic themes Timely, yet also has enough shelf time to last for the full quarter Leverage slides from the Guide to help illustrate key points around each theme with clients Commentary and bullet points help to simplify the complex

8 Global recovery – Insight from an alternative perspective PMI is a measure of manufacturing confidence based upon raw material inventories Heat mapping shows a picture of global recovery Developed markets particularly strong Top line – 86% of economies on positive territory Source: Markit, J.P. Morgan Asset Management. Heatmap colours are based on PMI relative to 50, which indicates expansion or contraction of the sector, for the time period shown. Expansion is percentage of 35 country universe covered by Markit with a PMI greater than 50 or a six month increase in the index greater than or equal to four. “Guide to the Markets - UK”. Data as at 31 March 2014.

9 Macro economics Low and rising inflationary environment An environment that favours equity and commodity returns Fixed Interest – Positive territory still possible in High Yield Choose fixed interest funds with a strategic approach to asset allocation Source: (All charts) BLS, Barclays Capital, Robert Shiller, Federal Reserve, Strategas/Ibbotson, J.P. Morgan Asset Management. Period returns are the arithmetic average of the nominal annual returns for the years specified by category. High or low inflation distinction is relative to median CPI inflation for the periods *High yield returns based on the period 1984 – Rising or falling inflation distinction is relative to the previous year CPI inflation rate. Commodities returns are based on GSCI, equities on the S&P 500 total return index, govt bonds are the Barclays Aggregate US Treasury Index, high yield is the Barclays US Corporate High Yield Index, real estate is a combination of UK and US property prices, and utilities is the Dow Jones Utilities Average Index. “Guide to the Markets - UK”. Data as at 31 March 2014.

10 A turbo-boost for the UK market? Investment levels lagging the those seen in the previous three periods of recovery Low levels compared to pre-GFC High levels of corporate liquidity A return of investment may provide a turbo- boost to the UK market. Source: (All charts) ONS, FactSet, J.P. Morgan Asset Management. *Business investment is a sub component of gross fixed capital formation and measures investments made by businesses. **Start date for each period is peak prior to the beginning of the recession. “Guide to the Markets - UK”. Data as at 31 March 2014.

11 Cyclical indicators in the US may re-accelerate The data indicated a sharp slowdown in both the housing market and the auto sector in the first quarter as the freezing weather in the US heavily disrupted parts of the economy. Toward the end of the quarter we began to witness a sharp acceleration in auto sales as pent up demand began to materialise. A key risk to consumer demand remains a rapid rise in US government bond yields and a subsequent increase in borrowing costs. Source: (Top left) BEA, FactSet, J.P. Morgan Asset Management. (Top and bottom right and bottom left) Census Bureau, FactSet, J.P. Morgan Asset Management. Capital goods orders deflated using the producer price index for capital goods. SAAR is seasonally adjusted annual rate. “Guide to the Markets - UK”. Data as at 31 March 2014.

12 Cyclical indicators in the US may re-accelerate Household net worth at highest levels ever recorded. – The US consumer is feeling ‘flush’ 26% drop in debt servicing costs between 3Q ‘07 and 1Q ‘14 Housing markets in strong positive territory Source: (Top left) BEA, FactSet, J.P. Morgan Asset Management. (Top and bottom right and bottom left) Census Bureau, FactSet, J.P. Morgan Asset Management. Capital goods orders deflated using the producer price index for capital goods. SAAR is seasonally adjusted annual rate. “Guide to the Markets - UK”. Data as at 31 March 2014.

13 US corporate earnings The data indicated strong corporate earnings support of the S&P 500 Profits continue to rise Employment costs continue to fall Source: (Left and top right) Standard & Poor’s, FactSet, J.P. Morgan Asset Management. (Bottom right) BEA, FactSet, J.P. Morgan Asset Management. “Guide to the Markets - UK”. Data as at 31 March 2014.

14 Europe – a different picture The data indicated a lag between corporate earnings and the strong performance of European equities BUT - Slowdown in EM less of an issue for Europe than the US AND - Early signs of an uptick in profits from 4Q 2013 Source: (Left) STOXX, FactSet, J.P. Morgan Asset Management. (Top right) IMF, FactSet, J.P. Morgan Asset Management. (Bottom right) STOXX, Standard & Poor’s, FactSet, J.P. Morgan Asset Management. *Emerging markets includes all developing and emerging economies. “Guide to the Markets - UK”. Data as of 31 March 2014.

15 Japan – Huge levels of stimulus looks set to continue Shinzo Abe policy is driving recovery Rising inflation and wage growth QE currently 47% of GDP – 100% by 2018? Wage growth plus Yen deflation focuses the Japanese consumer on domestic goods. Source: (Top left) US Federal Reserve, Bank of England, Bank of Japan, ECB, FactSet, J.P. Morgan Asset Management. (Bottom left) Japan Ministry of Health, Labour, and Welfare, FactSet, J.P. Morgan Asset Management. (Right) FactSet, J.P. Morgan Asset Management. “Guide to the Markets - UK”. Data as at 31 March 2014.

16 Emerging Markets – Is 7% Chinese GDP a concern? Chinese auto sales now outstrip the USA Continued growth trend with growth of the mass affluent middle classes in China Huge capacity for continued growth Source: (Top) BEA, China Automotive Information Network, J.P. Morgan Asset Management. (Bottom) World Bank, J.P. Morgan Asset Management. *Brazil and India as at SAAR is seasonally adjusted annual rate. “Guide to the Markets - UK”. Data as at 31 March 2014.

17 Fixed Interest – The problem child? The data indicates the impact of a 1% rise in interest rates on various selected indices Poor returns in Sovereign and high grade corporate debt Diversification of client portfolios still a requirement Opportunity still remains in High Yield and EMD Source: (Both charts) Barclays, FactSet J.P. Morgan Asset Management. Fixed income sectors shown are provided by Barclays Capital and are represented by – Treasury UK: Barclays Sterling Aggregate Gilts Index; Floating Rate – Barclays US Floating Rate Notes (BBB); IG credit: Barclays Global Aggregate – Corporates Index; High yield: Barclays Global High Yield Index; EMD sovereign ($): Barclays Emerging Markets – Sovereigns index; EMD corporate ($): Barclays Emerging Markets – Corporates Index; EMD sovereign (LC): Barclays Emerging Market Local Currency Government Index. Change in bond price is calculated using both duration and convexity.

18 How dynamic is the investment process? Source: FTSE, MSCI, Barclays, Dow Jones/UBS, FactSet, J.P. Morgan Asset Management. Returns are in base currency of the index. Annualised period covers 2004 to Govt bonds: Barclays Global Aggregate Government Treasuries; HY bonds: Barclays Global High Yield; EMD: Barclays Emerging Markets (USD); IG bonds: Barclays Global Aggregate – Corporates; Cmdty: DJ UBS Commodity; REITS: FTSE NAREIT All REITS; World ex UK: MSCI World ex UK; All share: FTSE All Share; Cash: JP Morgan Cash United Kingdom (3M). Portfolio; 20%: All Share; 10%: government bonds; 15%: IG bonds; 15%: EM equities; 10%: World ex UK equities; 10%: HY bonds; 5%: EMD; 5%: commodities; 5%: cash; and 5%: REITS. “Guide to the Markets - UK”. Data as at 31 March 2014.

19 Summary It is important to demonstrate to clients investment expertise, knowledge and understanding of their financial goals Guide to the Markets helps you to have more engaged in-depth conversations with clients helping to build stronger relationships with them Access our materials online at

20 What percentage of your investments are in fund of funds? 1) 0-25%2) 25-50%3) 50-75%4) %

21 What percentage of your investments are allocated to third party model portfolios? 1) 0-25%2) 25-50%3) 50-75%4) %

22 Do you build your own portfolios? 1) Yes2) No

23 JPM Fusion Fund range Investment policy and risk profile Investment policy – Investment is subject to documentation (Key Investor Information Document (KIID) and Key Features and Terms and Conditions), copies of which can be obtained free of charge from J.P. Morgan Asset Management Marketing Limited. Past performance is not a guide to the future General risks – The Fund will be subject to the risks associated with the underlying funds in which it invests. Further details below. – The value of your investments and income from them may fall as well as rise and you may get back less than you originally invested. – The JPM Fusion Income Fund charges the annual fee of the Authorised Corporate Director (ACD) against capital, which will increase the amount of income available for distribution to Shareholders, but may constrain capital growth. It may also have tax implications for certain investors. – Underlying fund risks – JPM Fusion Funds will be exposed to the following risks through investment in the underling funds; – The value of bonds and other debt securities held in the underlying funds may change significantly depending on market, economic and interest rate conditions as well as the creditworthiness of the issuer. – Issuers of bonds and other debt securities may fail to meet payment obligations (default) or the credit rating of bonds and other debt securities may be downgraded. These risks are typically increased for high yield bonds which may also be subject to higher volatility and be more difficult to sell than investment grade bonds. – The value of equity and equity-linked securities held in the underlying funds may fluctuate in response to the performance of individual companies and general market conditions. Emerging markets may be subject to increased political, regulatory and economic instability, less developed custody and settlement practices, poor transparency and greater financial risks. Emerging market currencies may be subject to volatile price movements. Emerging market securities may also be subject to higher volatility and be more difficult to sell than non-emerging market securities. – The underlying funds in which the Fund invests may have exposure to commodities which can be very volatile. – The value of exchange traded commodities will reflect the price of the underlying commodity or basket of commodities which can be very volatile. – Unregulated collective investment schemes are subject to less onerous regulatory supervision than regulated schemes and may be higher risk. – To the extent that any underlying assets of the Fund are denominated in a currency other than Sterling and are not hedged back to Sterling, movements in currency exchange rates can adversely affect the return of your investment. The currency hedging that may be used to minimise the effect of currency fluctuations may not always be successful. Please refer to the Fund's prospectus or Key Investor Information Document (KIID) for more information relating to the Fund.

24 Important information For Professional Clients only – not for Retail use or distribution. There can be no assurance that the professionals currently employed by J.P. Morgan Asset Management will continue to be employed by J.P. Morgan Asset Management or that the past performance or success of any such professional serves as an indicator of such professional's future performance or success. This document has been produced for information purposes only and as such the views contained herein are not to be taken as an advice or recommendation to buy or sell any investment or interest thereto. Reliance upon information in this material is at the sole discretion of the reader. The results of such research are being made available as additional information and do not necessarily reflect the views of J.P.Morgan Asset Management. Any forecasts, figures, opinions, statements of financial market trends or investment techniques and strategies expressed are unless otherwise stated, J.P. Morgan Asset Management’s own at the date of this document. They are considered to be reliable at the time of writing, may not necessarily be all-inclusive and are not guaranteed as to accuracy. They may be subject to change without reference or notification to you. It should be noted that the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Changes in exchange rates may have an adverse effect on the value, price or income of the product(s) or underlying overseas investments. Both past performance and yield may not be a reliable guide to future performance. There is no guarantee that any forecast made will come to pass. Furthermore, whilst it is the intention to achieve the investment objective of the investment product(s), there can be no assurance that those objectives will be met. Guide to the Market slides are shown for illustrative purposes only. J.P. Morgan Asset Management is the brand name for the asset management business of JPMorgan Chase & Co and its affiliates worldwide. You should note that if you contact J.P. Morgan Asset Management by telephone those lines may be recorded and monitored for legal, security and training purposes. You should also take note that information and data from communications with you will be collected, stored and processed by J.P. Morgan Asset Management in accordance with the EMEA Privacy Policy which can be accessed through the following website Investment is subject to documentation which is comprised of the Prospectus, Key Investor Information (KIID) and either the Supplementary Information Document (SID) or Key Features/Terms and Condition, copies of which can be obtained free of charge from JPMorgan Asset Management Marketing Limited. Issued by JPMorgan Asset Management Marketing Limited which is authorised and regulated in the UK by the Financial Conduct Authority. Registered in England No: Registered address: 25 Bank St, Canary Wharf, London E14 5JP. UKCN


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