Jupiter: The importance of diversification

Markets are facing many unknowns and potential headwinds this year, with uncertainty around inflation rates and central banks’ next rate moves; a record number of elections being held globally, which could result in unexpected policy changes, greater trade restrictions and escalating geopolitical tensions; and ongoing conflicts in Ukraine and the Middle East.

Periods like this show how difficult it can be to make macro forecasts, and why diversification can be so important for investors.

Considering the macro environment

In our Asian Equity Income strategy, we take into consideration the macro environment, as this allows us to identify the countries and sectors that we think are most attractive and those that we would prefer to avoid. We consider factors including geopolitics and local politics, demographics and business environments, as well as trends that can be beneficial, or detrimental, to certain sectors, such as artificial intelligence.

Once we have identified the countries and sectors that we are comfortable investing in, within those areas, we seek out companies that have high barriers to entry, strong balance sheets, good governance and management teams, and an ability to pay out, and grow, dividends.

Broad exposure across the investment universe

Our investment process results in a highly diversified portfolio of quality income companies, across the Asia Pacific (ex Japan) region, based in both developed and emerging markets. We have broad exposure across a wide range of sectors, including technology, commodities, gold mining, consumer, financials and property, as well as single holdings in areas like defence and utilities.

Through our positioning, we are not taking some kind of “bet” on there being a particular election outcome, or on interest rates cuts being implemented by a certain central bank, for example. Instead, given our diversified exposure, we believe that our portfolio should be well positioned across a range of possible scenarios.

Global and regional revenue exposure

Within our strategy, our revenue exposure is diversified across countries and regions, which could help to mitigate some of the geopolitical risk and election uncertainty.

Our global exposure includes positions in technology companies like Hon Hai Precision, which is the world’s largest electronics manufacturer, with businesses spanning from smartphones to AI data centres; and MediaTek, which is the top provider of smartphone chips globally by volume. We believe that our technology holdings should remain relatively resilient, as they are highly adaptable and continue to generate revenue from across the globe. We also have exposure to sectors like commodities, including miners BHP and Newmont, which have solid balance sheets and offer attractive dividend yields; as well as having financials exposure, including global banks like Macquarie.

At the same time, we invest in several companies that generate local revenues and that we view as being relatively insulated from the global economy, or which play on a theme of “remoteness”. These include positions like Power Grid, an Indian electricity transmission company, which should benefit from India’s ongoing development; and Bank Rakyat in Indonesia, which specialises in microlending, providing services to customers that live very remotely with no alternative safe financing options.

Revenue exposure – Jupiter Asian Equity Income strategy

Reducing interest rate risks

We also have diversified exposure in terms of interest rate risk. Some of our positions, including banks (e.g. DBS Group and HSBC) and insurance companies (e.g. Suncorp), have business models that should continue to benefit from higher rates, while other names such as those in the tech sector tend to prefer lower rates.

Gold as a hedge

Elsewhere, we hold a position in the world’s largest gold miner, Newmont, which we view as a kind of hedge against uncertainty, and which has recently benefitted from record-high gold prices.

We also have exposure to ST Engineering, which should benefit from increased government spending on defence if geopolitical tensions do rise further. We like the company due to its defence and Smart City divisions, as well as its aircraft MRO (maintenance, repair & overhaul) business.

High conviction portfolio

We believe that our highly diversified portfolio should be well positioned for a range of macroeconomic scenarios, and we continue to have high conviction in each of the quality income companies that we hold. While we recognise that the next leg of this economic cycle could be more challenging, we still expect to see growth in earnings and dividends coming from a good number of companies held in the strategy. Given our focus on highly liquid companies, if new information or developments lead us to change our minds, we also have the ability to easily and quickly adjust our positioning.

Holding examples are for illustrative purposes only and are not a recommendation to buy or sell.

The value of active minds: independent thinking

A key feature of Jupiter’s investment approach is that we eschew the adoption of a house view, instead preferring to allow our specialist fund managers to formulate their own opinions on their asset class. As a result, it should be noted that any views expressed – including on matters relating to environmental, social and governance considerations – are those of the author(s), and may differ from views held by other Jupiter investment professionals.

Important information

This document is intended for investment professionals* and is not for the use or benefit of other persons, including retail investors, except in Hong Kong. This document is for informational purposes only and is not investment advice. Market and exchange rate movements can cause the value of an investment to fall as well as rise, and you may get back less than originally invested. The views expressed are those of the individuals mentioned at the time of writing, are not necessarily those of Jupiter as a whole, and may be subject to change. This is particularly true during periods of rapidly changing market circumstances. Every effort is made to ensure the accuracy of the information, but no assurance or warranties are given. Holding examples are for illustrative purposes only and are not a recommendation to buy or sell. Issued in the UK by Jupiter Asset Management Limited (JAM), registered address: The Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ is authorised and regulated by the Financial Conduct Authority. Issued in the EU by Jupiter Asset Management International S.A. (JAMI), registered address: 5, Rue Heienhaff, Senningerberg L-1736, Luxembourg which is authorised and regulated by the Commission de Surveillance du Secteur Financier. For investors in Hong Kong: Issued by Jupiter Asset Management (Hong Kong) Limited (JAM HK) and has not been reviewed by the Securities and Futures Commission. No part of this document may be reproduced in any manner without the prior permission of JAM/JAMI/JAM HK.

*In Hong Kong, investment professionals refer to Professional Investors as defined under the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) and in Singapore, Institutional Investors as defined under Section 304 of the Securities and Futures Act, Chapter 289 of Singapore. 427

The value of actie minds – independent thinking: A key feature of Jupiter’s investment approach is that we eschew the adoption of a house view, instead preferring to allow our specialist fund managers to formulate their own opinions on their asset class. As a result, it should be noted that any views expressed – including on matters relating to environmental, social and governance considerations – are those of the author(s), and may differ from views held by other Jupiter investment professionals.

Important Information: This document is intended for investment professionals* and is not for the use or benefit of other persons, including retail investors. This document is for informational purposes only and is not investment advice. Market and exchange rate movements can cause the value of an investment to fall as well as rise, and you may get back less than originally invested. The views expressed are those of the individuals mentioned at the time of writing, are not necessarily those of Jupiter as a whole, and may be subject to change. This is particularly true during periods of rapidly changing market circumstances. Every effort is made to ensure the accuracy of the information, but no assurance or warranties are given. Issued in the UK by Jupiter Asset Management Limited (JAM), registered address: The Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ is authorised and regulated by the Financial Conduct Authority. Issued in the EU by Jupiter Asset Management International S.A. (JAMI), registered address: 5, Rue Heienhaff, Senningerberg L-1736, Luxembourg which is authorised and regulated by the Commission de Surveillance du Secteur Financier. No part of this document may be reproduced in any manner without the prior permission of JAM/JAMI/JAM HK.

*In Hong Kong, investment professionals refer to Professional Investors as defined under the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong).and in Singapore, Institutional Investors as defined under Section 304 of the Securities and Futures Act, Chapter 289 of Singapore.

For professional investors in US Offshore only: The Jupiter Asia Pacific Income Fund (IRL) has not been registered under the United States Investment Company Act of 1940, as amended, nor the United States Securities Act of 1933, as amended. None of the shares may be offered or sold, directly or indirectly in the United States or to any US Person, unless the securities are registered under the Act, or an exemption from the registration requirements of the Act is available. A US Person is defined as (a) any individual who is a citizen or resident of the United States for federal income tax purposes; (b) a corporation, partnership or other entity created or organized under the laws of or existing in the United States; (c) an estate or trust the income of which is subject to United States federal income tax regardless of whether such income is effectively connected with a United States trade or business.
For professional investors in LATAM only: Legal Notice for Residents in the Republic of Argentina: This document includes a private invitation to invest in securities. It is addressed only to you on an individual, exclusive, and confidential basis, and its unauthorised copying, disclosure, or transfer by any means whatsoever is absolutely and strictly forbidden. Jupiter Asset Management will not provide copies of this prospectus, or provide any kind of advice or clarification, or accept any offer or commitment to purchase the securities herein referred to from persons other than the intended recipient. The offer herein contained is not a public offering, and as such it is not and will not be registered with, or authorised by, the applicable enforcement authority. The information contained herein has been compiled by Jupiter Asset Management, who assumes the sole responsibility for the accuracy of the data herein disclosed.

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This is not an offer of securities in Colombia or to any Colombian national, citizen or resident of Colombia or a corporation or partnership organized under the laws of Colombia or having a principal place of business in Colombia (“Colombian Residents”). All information, statistics, data and projections provided herein (the “Information”) along with the prospectus of each one of the funds (the “Prospectus”) are not intended for distribution, promotion or marketing purposes to Colombian Residents. Both the Information and Prospectus: (i) have been drafted, prepared and listed for investment professionals and are not intended to be addressed to any individual investor or to the general public in Colombia; and (ii) does not constitute a public offer under the current provisions of Colombia as they are not being offered or addressed to an undetermined amount of people or to more than one hundred individually identified potential investors. The Information and Prospectus listed herein are not an invitation tosubscribefor units in funds or any other fund managed by Jupiter (the “Funds”). Funds’ units mentioned in this Prospectus have not been, and will not be, registered under any applicable securities laws in Colombia. Therefore, they may not be publicly offered in Colombia or to or for the benefit of a Colombian Resident (as defined above).

The Funds may not be distributed, promoted or marketed in Colombia or to Colombian residents, unless such promotion and marketing is performed by an authorized distributor in compliance with Part 3 of Decree 2555 of 2010 and any other applicable rules and regulations related to the promotion of foreign funds in Colombia as amended from time to time. The Information and Prospectus is listed for general guidance only, and it is the responsibility of any person or persons in possession of this documentation to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction. Potential applicants for Fund’s units should inform themselves of any applicable legal requirements, exchange control regulations and applicable taxes in the countries of their respective citizenship, residence or domicile.

This private offer commences on the date as stated in the title and it avails itself of the General Regulation No. 336 of the Superintendence of Securities and Insurance. This offer relates to securities not registered with the Securities Registry or the Registry of Foreign Securities of the Superintendence of Securities and Insurance, and therefore such shares are not subject to oversight by the latter. Being unregistered securities, there is no obligation on the issuer to provide public information in Chile regarding such securities. These securities may not be subject to a public offer until they are registered in the corresponding Securities Registry.

Legal Notice for Residents of Mexico: The securities have not been and will not be registered with the National Registry of Securities, maintained by the Mexican National Banking and Securities Commission and, as a result, may not be offered or sold publicly in Mexico. The fund and any underwriter or purchaser may offer and sell the securities in Mexico on a private placement basis to Institutional and Accredited Investors pursuant to Article 8 of the Mexican Securities Market Law.

Legal Notice for Residents of Paraguay: The Shares have not been registered with the Comisión Nacional de Valores of Paraguay (CNV), neither with the Stock Exchange of Asuncion (BVPASA) and are being placed by means of a private offer. CNV nor BVPASA has not reviewed the information provided to the investor. This document is only for the exclusive use of specific investor in Paraguay and is not for public distribution.

Legal Notice for Residents of Peru: The funds have not been registered before the Superintendencia del Mercado de Valores (SMV) and are being placed by means of a private offer. SMV has not reviewed the information provided to the investor. This document is only for the exclusive use of institutional investors in Peru and is not for public distribution.

Legal Notice for Residents of Uruguay: The sale of the securities qualifies as a private placement pursuant to section 2 of Uruguayan law 18,627. The securities must not be offered or sold to the public in Uruguay, except in circumstances which do not constitute a public offering or distribution under Uruguayan laws and regulations. The securities are not and will not be registered with the Financial Services Superintendency of the Central Bank of Uruguay. The securities correspond to investment funds that are not investment funds regulated by Uruguayan law 16,774 dated September 27, 1996, as amended.