IN BRIEF - JP Morgan Asset Management
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PORTFOLIO INSIGHTS
2020: From margin to mainstream
Emerging market debt strategy
Q1 2020
IN BRIEF
• We expect another positive year for emerging market debt in 2020, with base case
expectations of about 8% returns for emerging market hard currency, and 11% for
emerging market local currency. With currencies presenting a near pure beta play, we
believe that hard currency debt may have a marginal performance edge on a risk-adjusted
basis.
• Our investment views incorporate a low-growth base case scenario for the developed world
and an acceleration in emerging market growth from 4.1% in 2019 to 4.3% in 2020.
Although Chinese growth is set to continue to decelerate, recoveries elsewhere should
boost emerging market economic activity. We therefore expect the emerging market
growth premium over the developed world to widen to 2.9% in 2020, the highest level
since 2016.
• Compared to last quarter we now expect closer relative returns, supporting the case for a
more balanced asset allocation going forward.
• We think local currency debt is attractively valued and expect increasing investor flows
following recent strong performance. We see room to add more anchored emerging market
currencies within our more flexible strategies. Within the hard currency world, we continue
to find value in high yield, especially within the BB complex.
• Weaker corporate earnings and a higher default rate mean we are entering 2020 with a
more negative outlook for emerging market corporate debt but balance sheets remain
strong, particularly in investment grade.
IMPROVING GROWTH OUTLOOK TO SUPPORT EMERGING MARKET DEBT
IN 2020
We expect another positive year for emerging market debt in 2020, with base case
expectations of roughly 8% returns for emerging market hard currency, and 11% for
emerging market local currency. With currencies presenting a near pure beta play, we believe
that hard currency emerging market debt could offer a marginal performance edge on a risk-
AUTHOR adjusted basis.
Central to unlocking these expected returns is the continued validity of our low growth base
case scenario for the developed world. We believe emerging market growth can accelerate
from 4.1% in 2019 to 4.3% in 2020. While we expect a continued growth deceleration in
China, recoveries elsewhere—for example Brazil, Indonesia, Turkey and Russia—should
contribute to improving growth.
Pierre-Yves Bareau
Head of Emerging Market Debt, Forecasts are not a reliable indicator of future performance.
J.P. Morgan Asset Management All data is sourced by J.P. Morgan Asset Management as of December 2019 unless otherwise stated.PORTFOLIO INSIGHTS
We expect the emerging market growth premium over the Against this backdrop we expect emerging market debt to take
developed world to widen to 2.9% in 2020, the highest level some leadership from external drivers. A divided US government
since 2016 (Exhibit 1). We believe the US economy will avoid a is unlikely to deliver large shifts in policy and it is possible that
recession in 2020, and that the European economy should see the associated uncertainty is negative for growth. With weak
an improvement in export demand. While leading indicators growth, low inflation and a plethora of sources of uncertainty in
point to a stabilisation in European growth, we have not yet play, we continue to expect developed market core rates to
seen an increase in activity. Much of our growth expectations in remain low. These negative factors in the developed world may
2020 rely on a Chinese recovery, which appears to be increasing become a technical positive for emerging market debt: with G4
in probability. Recovery feeds from better sentiment, so a balance sheets expanding at an annual rate of USD 1.2 trillion,
resolution to ongoing trade tensions will be crucial if emerging emerging market debt is likely to present a strategic source of
market and global growth is to gain momentum. real yield for investors.
While we expect core financial conditions in the world’s
We expect the difference between emerging market and
developed market GDP to widen slightly developed economies to remain easy, late cycle credit and
earnings dynamics provide a risk to this thesis. Accordingly, we
EXHIBIT 1: REAL GDP GROWTH, % QUARTER ON QUARTER
(SEASONALLY ADJUSTED ANNUAL RATE)
think the US dollar may shift to a weakening bias, with
6 Diff DM EM
additional drivers of monetary stance shifting to a more
expansionary footing. Taken together, these factors underpin
5 JPMAM 2020F
EM 4.4%yoy
our belief that emerging market local currency debt could
potentially perform well in 2020.
4
%q/q saar
EM-DM alpha
3 2.9%yoy
CHINA: NEXT STEPS IN THE TRADE WAR
2
Our base case expectation for the Chinese economy in 2020 is
1
5.6% GDP growth, marked by an incremental recovery in the
second half of the year. In our view, a “phase one” trade deal
0 with the US that removes or amends existing tariffs is possible,
3Q14 3Q15 3Q16 3Q17 3Q18 3Q19
though difficult negotiations lie ahead. These could include
Source: J.P. Morgan Asset Management, J.P. Morgan, Bloomberg: data as of intellectual property enforcement and technology transfers,
3 December 2019. Data for 2Q19 includes estimates for Argentina and Turkey.
Opinions, estimates, forecasts, projections and statements of financial market among other areas, that may prove controversial to both sides.
trends are based on market conditions at the date of the publication, constitute
our judgment and are subject to change without notice. There can be no We think a number of key points behind the current trade
guarantee they will be met. tensions may remain unresolved, including the Huawei 5G issue,
a number of “Made in China 2025” policy directives, the South
Emerging market economic growth is dependent on demand for China Sea and the “One Belt One Road” programme. Taken
the bloc’s exports. Over time, the composition and value-add of together, these points form a material risk to our thesis, given
this component has matured. Today’s increasingly sophisticated their capability for surprise. A further intensification of the trade
EM exports now account for a greater portion of global war is possible, potentially reflected in new tariffs and
manufacturing and an increasing amount of intra-emerging restrictions on Chinese individuals and activity. China is not
market trade. Emerging markets now enjoy a greater level of
defenceless, and maintains the capability to push back—up to
growth resilience in the event of a slowdown in the developed
and including weakening its currency. So far, the Chinese
markets, or China.
response has focused on stimulating domestic activity, through
Interest rate cuts from emerging market central banks have infrastructure investment, tax cuts for small businesses, and
helped to sustain this resilience. Easier monetary policy helped other incentives.
to protect growth in 2019 but many central banks now have less
We have factored continued trade tensions into our expectations
policy room in 2020. This leaves the emerging market world
vulnerable to a growth shock if trade wars intensify, with trade- for Chinese growth. We assign a 35% probability to the
sensitive currencies an acute source of risk. However, less completion of a phase one trade deal, which we view as positive
monetary policy flexibility means we expect to see increasing use for Chinese growth. Successful completion of a phase one deal
of fiscal policy. Emerging market fiscal stimulus has been led by raises our expectations for Chinese GDP growth to 5.6%. In our
Asian and EMEA (Europe, Middle East and Africa) countries. worst case scenario, to which we assign a 10% probability, trade
Inflation also remains well anchored, though dispersion is tensions intensify to include a 25% tariff on a further USD 265
beginning to appear, which is important as it means selectivity billion in Chinese imports, plus the addition of “poison pill”
will remain an important component of portfolio construction. measures in the fourth quarter.
2 2 0 20 : F R OM MA R G IN TO M AINS TREAMPORTFOLIO INSIGHTS
Within our base case assumptions, we assign a 30% probability However, Chinese investment in technology is likely to power a
to a “Cold War” scenario where the trade war broadens to recovery in the semiconductor cycle in the first quarter,
include Europe and Japan and the 25% trade tariff extends to eventually supporting a mid-year turn in the Asian
include all Chinese imports. In this scenario we expect Chinese manufacturing cycle, and finally a pickup in the industrial cycle
growth to drop to 4.2%. We think there is a 25% chance of an towards the close of the year. A recovery in the Asian
manufacturing cycle does not mean that China’s repaired the
easing or postponement of the trade war, in which we believe
damage from the trade war, but rather that the economy is on a
that China could grow 5.4%. On a probability-weighted basis, it
pathway to do so.
is possible 2020 Chinese growth slips to 4.9%, though we
acknowledge a dispersion of risk around this expectation Currently, Chinese factory activity is visibly slower than that
(Exhibit 2). seen in September 2017 (Exhibit 3), with intermediate goods
(for assembly) continuing to slow. Wage growth has slowed
Three scenarios for the trade war and their impacts on Chinese accordingly and household disposable income has fallen. A
economic growth gradually improving global purchasing managers’ index suggests
that support may be forthcoming, barring another flare up in
EXHIBIT 2: IMPACT OF THE TRADE WAR ON CHINESE ECONOMIC GROWTH
the trade dispute.
Scenarios Measures in 2020 Growth Prob.
China has responded to consumer weakness with tax cuts while
Phase 1 25% on $250bn (no Dec tariffs + 5.8% 35%
partial rollback of tariffs) Chinese banks have been increasing credit. We expect China to
continue injecting stimulus into the economy, possibly increasing
Postpone 25% on $250bn + 15% on $104bn 5.4% 30%
(no Dec tariffs only) by 8%-11% in 2020 and coinciding with a RMB 1 trillion increase
in local government debt raising. These actions should create
Cold War 25% on All + other measures 4.2% 35%
growth resilience going forward.
Source: J.P. Morgan Asset Management. Growth forecasts reflect estimates of real
economic activity. Opinions, estimates, forecasts, projections and statements of
Beyond the urgency in these policy decisions, China faces
financial market trends are based on market conditions at the date of the longer-term growth worries. The realities of China’s ageing
publication, constitute our judgment and are subject to change without notice. population, for example, will become more visible through rising
There can be no guarantee they will be met.
dependency ratios in the new decade. China is looking to offset
the impact through the creation of an industrial and
A cooling Chinese economy will have global implications,
technological hub in the south east of the country. We expect
reflecting in weaker manufacturing data in both developed and
China to spend around USD 200 billion per year over the next 11
emerging markets. China is a major driver of the 40% of the
years to bring next generation infrastructure to a small core of
global industrial demand that originates in Asia, meaning that
cities in this region.
the trade war impacts European car manufacturers, metals
producers and commodity-related industries accordingly. While The composition of China’s trade accounts has also changed.
American manufacturing accounts for only 5% of exports, in Nearly 35% of China’s exports now go to the emerging world,
Europe the sensitivity is more elevated, as manufacturing versus less than 15% that go to the US. This shift in composition
accounts for 16% of total exports. has helped the Chinese trade account and improved investor
The bounce in global industrial production is from the technology cycle; manufacturing, industrial and auto output remain weak
EXHIBIT 3: GLOBAL INDUSTRIAL PRODUCTION (IP) BY SECTOR, % CHANGE MONTH ON MONTH
7% Machinery & equipment (11%) Tech (7%) Food, Textiles, Utilities (24%) Autos (7%) Other Manufacturing (42%) Mining (9%)
6% Global IP (3m/3m ann. growth)
5%
4%
3%
2%
1%
0%
-1%
-2%
Jan 15 Sep 15 May 16 Jan 17 Sep 17 May 18 Jan 19 Sep 19
Source: Credit Suisse, Haver. Numbers in parentheses are % contribution to Global IP. Data as of 30 September 2019.
J.P. MORGAN ASSE T MAN AGE ME N T 3PORTFOLIO INSIGHTS
sentiment toward China. In the fourth quarter of 2019, China 2020 also create risk for investors, as the outcomes could alter
received nearly USD 25 billion in bond inflows, reflecting the fundamental framework of the country. We will watch both
investor confidence in its policy and the appeal of a substantial events closely.
rate differential. While the Chinese economy is slowing down, we
With social security reform now passed, Brazil’s political
think Chinese government bonds will remain relatively stable.
leadership will address a myriad of less visible reforms. If
We expect the People’s Bank of China to maintain liquidity and
successful, we expect to see Brazil posting better fiscal and
gradually allow rates to fall, though we think they will continue
growth projections. The challenge is that the market may look
with the policy of a rate buffer.
prematurely for evidence of growth and thus a re-rating. Were
progress on reforms to regress, investors could easily withdraw
EMERGING MARKET ALPHA: KEY COUNTRY VIEWS some of their recent enthusiasm, which could result in both a
weakening of the currency and a material increase in local
While we expect a solid return from emerging market debt in yields. However, we think it more likely that reforms will
2020, we think the dispersion within the asset class—and the continue to gather momentum, and that this will reflect in a
momentum around that dispersion—will drive performance. Our moderately stronger currency.
2020 scenarios suggest a wide range of opportunities in
emerging market currencies and local currency debt, while South Africa and Indonesia: Potential challenges ahead
credit default swaps remain broadly expensive.
South Africa enters the new year facing a number of challenges,
Russia and Mexico may outperform Brazil and Chile perhaps most notably around the budget, which is expected in
February. Rating agencies will look for evidence of improving
In Russia, although the risk of sanctions remains, we think fiscal discipline. Should South Africa fall short, the country’s
Russian bonds will likely stay out of scope. Russia currently bonds will likely fall below investment grade, resulting in their
operates a twin surplus economy, which helps the outlook for exclusion from the widely followed World Government Bond
hard and local bonds alike. In our view, the currency could Index (WGBI). We think it likely that the central bank remains
appreciate by around 4%, especially if the central bank cuts constrained by the fiscal policy outlook.
rates less than expected, which would create considerable value
in local bonds and could attract strong support for the market. Indonesia enters the year in a relatively better position. In our
The imposition of sanctions against Russia could materially view, it is likely that the country maintains the current status
weaken both the local currency and local bond prices. quo economically, helped by President Jokowi’s policy continuity.
This makes local rates in Indonesia attractive. The main risk for
Although Mexican fiscal performance was one of the positive Indonesia is that the country is sensitive to broader market
surprises of 2019, we think a US slowdown will present a rising beta, meaning an escalation of the trade war or another
headwind. We expect to see a gradual deterioration in Mexican negative global event could potentially shock the local economy.
fundamentals, as consumer strength is already fading and
business sentiment weakening. As a result, Mexico’s ratings are Turkey: Looking for a cyclical upswing in 2020
at risk of being downgraded by Moody’s and S&P, both of which
already have a negative outlook. We also think the state oil We expect Turkey to muddle through its challenges in 2020,
monopoly PEMEX is likely to have its rating downgraded in the which should strengthen both the currency and local bond
first half of the year. prices. We see an upswing in the Turkish cyclical indicator, which
in turn points to a recovery in economic growth, likely due to
Despite these expectations, Mexico’s risk premium appears to be the combination of fiscal, credit and monetary impulses, which
cheap. We assign a 15% probability to a more bearish outcome, we expect to align in 2020.
with the biggest risk being a shock to the real economy from
tariffs, downgrades, a deep recession or a large fiscal or political Turkey’s current account is also on an improving trajectory and
shock. In light of these risks, we think it likely that Banxico we expect it to move into surplus in the coming year. Inflation is
continues to ease rates to around the 6% level. Given the higher also moderating. Turkey’s deteriorating public finances present a
probability of the gradual deterioration scenario, we believe risk, albeit one that is reduced through growth and easing
Mexican local bonds continue to offer value. external debt issuance pressure. Hence we see some value in
hard currency Turkish bonds.
The outlook for Chile looks more complex. We believe the most
likely scenario is that the country muddles through the current
political situation, but the risk of major changes is not negligible.
We see room for the currency to strengthen if Chile resolves its
issues, and more material weakening if it fails to do so. These
risks are reflected in local bond yields. In our view, increased
fiscal spending may smooth the path towards a new constitution
and government. The planned plebiscites in April and October
4 2 020 : F R O M MA R G IN TO M AINS TREAMPORTFOLIO INSIGHTS
EMERGING MARKET HARD CURRENCY: SEARCHING EMERGING MARKET LOCAL CURRENCY:
FOR QUALITY INCOME IMPROVING SPONSORSHIP, BRIGHTER OUTLOOK
Emerging market hard currency debt valuations have increased as Local currencies look attractively valued (Exhibit 5), supported
more investors seek quality income. For managers, a paramount by G3 central bank balance sheets that are continuing to add
concern is avoiding the drawdown that follows when countries reserves to the system and growth expectations that are
deliver negative surprises, as hard currency debt has entered a rebounding from a low base. Within local curves, we think
period where the market has become more judgemental and duration remains anchored by core rates, though individual
punishes those countries that deviate from trend. country allocations are in places more finely balanced.
The quality income theme has tightened the investment grade
market and is prompting investors to reach across into high Local currency yields look attractive
yield in search of upgrade candidates and mispriced value,
EXHIBIT 5: REAL YIELD BY COUNTRY VERSUS FIVE-YEAR AVERAGE
which makes calling a broader beta trend more challenging. We STANDARD DEVIATION
continue to see value in the BB arena, where more attractive 8 4
Real yield (LHS) 5yr Z score (RHS)
spreads may benefit from the relative tightness seen in the BBB
universe (Exhibit 4). In this market, we think credit 6 3
differentiation continues to be crucial for successful investing, 4 2
though we caution that the Treasury call may yet again be more
2 1
important than the spread call.
0 0
BB spreads look attractive versus the tight BBB universe -2 -1
EXHIBIT 4: CHANGE IN BB TO BBB/B THREE-MONTH SPREAD -4 -2
150 -6 -3
EUR
CZK
HUF
DKK
CNY
PLN
JPY
USD
CLP
RON
THB
KRW
INR
TRY
MYR
PEN
COP
RUB
PHP
BRL
MXN
IDR
ZAR
BB-BBB/B 3mo spread
100
Source: J.P. Morgan Asset Management, Bloomberg, as of December 2019. Real
yield is the 10-year bond yield minus realized CPI year-over-year.
Spread Chg (bps)
50
As the market embraces expectations of a stable or softening
0
dollar, investors have increasingly turned to the local currency
space as a source of both performance and higher yielding
-50
duration. We think the optimal positioning for investors is
currently to build exposure to selective duration while playing
-100
Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Jan 19 tactical currency beta. However, as momentum towards local
currencies builds, we think a shift towards higher beta names—
Source: J.P. Morgan Asset Management, Bloomberg.
for example, higher yielding local issuers—might produce higher
returns.
Increasing social tension generated substantial risk in 2019, and
Supporting this transition is an improving level of investor
we think will continue to do so in the near future. Looking at
engagement. While emerging market local currency bonds have
socio-economic indicators, we see youth unemployment rising
lagged competitive asset classes in recent months, recent data
ominously in a number of countries, while corruption and
shows a sharp pickup in flows into local currency versus peer
concentration of wealth are becoming more paramount in
assets. We expect seasonality and 2019’s stronger performance
others. An evaluation of these factors suggests a concentration
to trigger further flows into the asset class and support
of risk in both Middle East and Latin American countries, an
performance early in the first quarter.
observation that we remain mindful of in our investment
strategy. We further note that the increasing prevalence of
investments based on environmental, social and governance
(ESG) factors has had a performance impact, enhancing issuers
with more positive scores. We expect the pool of ESG-aware
assets to continue to grow.
J.P. MORGAN ASSE T MAN AGE ME N T 5PORTFOLIO INSIGHTS
EMERGING MARKET CORPORATES: LATE With concern on late cyclicality in sharper focus, it is not
unreasonable to expect the market to look more closely at
CYCLICALITY, STRONG CREDIT QUALITY default risk as a potential source of performance impairment. In
Of the three emerging markets asset classes, emerging market recent years, emerging market corporates have proven
corporates show the most evidence of late cyclicality. However, themselves good servicers, presenting a relatively low default
after several years of prudent balance sheet management, they rate. 2019 continued this trend, with a 1.2% overall default rate.
also appear well prepared for an eventual slowdown. The We think default rates will increase modestly in 2020 to roughly
market has rewarded these corporate performances with 2.4%, including distressed Argentina (Exhibit 7). Removing
relatively full valuations, meaning investors expect a solid Argentina reduces our expectation to 1.7%, a level more
performance into a moderating headwind. consistent with recent performance.
At the aggregate level, a negative earnings trend may add Weaker corporate earnings and a higher default rate mean we
pressure to the sector, though overall sector leverage remains are entering 2020 with a more negative outlook for the broad
well below the 2016 peak (Exhibit 6). Emerging market market. As such, we believe that 2020 will be a year where
corporates have also been reducing capex levels over the last few excellence in credit selection can create value for investors. We
years, particularly in Latin America. Interestingly, emerging also note that differentiation within emerging market corporate
market corporate debt issuer forecasts indicate that the current debt is wide: investment grade balance sheets look solid, but the
weakness in earnings is likely to continue, while emerging market high yield space looks more vulnerable.
equity forecasts are pricing in a rebound. It is worth noting that
With the credit cycle maturing, we think the majority of
the two markets differ markedly in issuer composition.
emerging market corporate sectors will report past-peak credit
In addition to corporate earnings, we see a number of factors in fundamentals, with financials following suit over the next 12
the year ahead that may influence returns. Between 2020 and months—a situation that would present more of a challenge if
2022, there will be a substantial increase in external bond balance sheets in the broader emerging market corporate
maturities, dominated by Asia and EMEA, with China being a universe were not beginning the process from a strong position.
major contributor. Within China, the bulk of these maturities As a result, we do not see defaults disrupting the story as has
come from investment grade issuers. Within the Chinese high happened in the past, which gives us scope for selection. While
yield space, we expect real estate borrowers to be able to we are more bearish than consensus on earnings, we still see
access finance, as many issuers have been actively prefunding solid credit fundamentals within the space as a whole.
2020 maturities. We expect the peak for high yield debt
Also, while the refinancing schedule is brisk in 2020, we think
maturities in April, with some USD 7.3 billion coming due (July’s
many corporates have moved ahead of the curve and are thus
USD 7.5 billion is a higher overall total, but the composition is
well prepared to manage maturities over the next year. The
oriented more towards investment grade).
major concern in the corporate space is that the improving
macro environment is not yet strong enough to generate much
performance, while faltering growth could expose investors to
greater downside risk.
Leverage in the emerging markets corporate sector remains EM corporate default rates remain low but will likely increase
well below the 2016 peak slightly in 2020
EXHIBIT 6: NET LEVERAGE ACROSS EM HIGH YIELD EXHIBIT 7: EM CORPORATE HIGH YIELD DEFAULT RATE
5.1%
2.4x
2.2x 4.3%
2.0x 3.8% 3.8%
1.8x 3.5%
2.4%
2.2%
1.6% 1.5%
0.6%
2016 2017 2018 H1 2019 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E
Source: J.P. Morgan Asset Management.
6 2 0 20 : F R OM MA R G IN TO M AINS TREAMPORTFOLIO INSIGHTS
CONCLUSION: HEADED TOWARDS THE MAINSTREAM?
Our base assumptions look for a continuation of the current low Our base scenario expects another solid year for emerging
growth environment, with key drivers around trade and politics market debt investors in 2020, though our riskier scenarios are
ranged against developed market easing. For this reason, we more pessimistic. This argues in favour of a more balanced asset
believe that core yields will remain contained, meaning allocation, and hence we think there is merit in rotating from
emerging market currencies are likely to appreciate due to G4 external credit and local duration into emerging market
balance sheet expansion and softening US growth. currencies early in the year. Valuation provides some comfort in
external credit, though more for sovereign and BB rated bonds.
We think the emerging market growth premium will recover,
Locally, we like duration in mid- to high- yielding countries
which is an essential component of our investment thesis. While
where we see scope for policy easing, such as in Mexico, Peru
we think Chinese growth may slow further to 5.8% in 2020 as a
and Russia.
result of the trade dispute, we see other emerging market
economies recovering while the developed world slows. With core yields in European sovereign bonds remaining low, we
Emerging market accounts show no large imbalances on think emerging market real growth and real yields will continue
aggregate, but differentiation remains key, especially as some to look attractive, leading to a structural “mainstreaming” that
central banks have actively used policy ammunition. Therefore, should support the asset class in the year ahead. With lower net
not all emerging markets still have room to ease, with fiscal supply expected in 2020, we may see these flows result in
space even more limited. The increasing prevalence of social further performance resilience.
tension, both globally and within emerging markets, may
pressure already vulnerable emerging markets, and remains a
key risk for us in 2020.
J.P. MORGAN ASSE T MAN AGE ME N T 7PORTFOLIO INSIGHTS The Market Insights program provides comprehensive data and commentary on global markets without reference to products. Designed as a tool to help clients understand the markets and support investment decision-making, the program explores the implications of current economic data and changing market conditions. For the purposes of MiFID II, the JPM Market Insights and Portfolio Insights programs are marketing communications and are not in scope for any MiFID II / MiFIR requirements specifically related to investment research. Furthermore, the J.P. Morgan Asset Management Market Insights and Portfolio Insights programs, as non-independent research, have not been prepared in accordance with legal requirements designed to promote the independence of investment research, nor are they subject to any prohibition on dealing ahead of the dissemination of investment research. 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Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, 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. Both past performance and yields are not a reliable indicator of current and future results. J.P. Morgan Asset Management is the brand for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. 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