JP Morgan has launched a diversified real return fund for the firm’s global multi-asset group.
The fund will invest in inflation-linked bonds, real assets, investment grade credit, corporate bonds with inflation overlays and inflation-sensitive equities.
The fund’s benchmark is the 1 to 10 year Barclays Capital index-linked gilts index. It will aim to achieve an annual return, before fees, of 3 per cent in excess of the UK retail prices index, with around 40 to 60 per cent of equity volatility.
At launch, it will offer a retail share class with a minimum investment of £1,000 lump sum or £100 a month. Institutional share classes suitable for pension scheme clients and other institutional investors will be launched over the coming months. The fund has a 1.25 per cent annual management fee.
The team expects the asset mix to be around 65 per cent lower-volatility assets, like index-linked gilts, corporate bonds with inflation overlays and cash alternatives, and 35 per cent higher-volatility assets, like real estate investment trusts, commodities, natural resources equities and infrastructure equities.
JP Morgan Asset Management head of UK institutional John Stainsby says: “The popularity of index-linked government bonds in the past few years of above-target inflation has driven yields down to extremely low levels. The fund has been designed for investors who want to diversify their exposure beyond index-linked bonds to other inflation-sensitive assets.”