JP Morgan Asset Management (JPMAM) has received regulatory approval to launch its JPMorgan Singapore & Asia Equity Income Fund under the Monetary Authority of Singapore (MAS) Equity Market Development Programme (EQDP). JPMAM is one of the three asset managers chosen in the first tranche and thus far one of nine total asset managers selected to receive a portion of the $5 billion EQDP fund.
With a balanced allocation of 50% to Singapore equities – spanning large, mid, and small cap stocks – and 50% to Asia ex-Japan equities, the fund is designed to harness the full advantage of these equity markets. Its innovative income approach, combining a portfolio which has a meaningful focus on income-oriented stocks with an options overlay, is a key differentiator among diverse EQDP offerings.
The fund seeks to deliver diversified income by investing across financial instruments, countries and sectors in Asia, including Singapore, the fund aims to deliver diversified income opportunities. In addition to capturing stock dividends, the Fund employs a disciplined options overlay on an underlying equity income portfolio to generate additional income.
It also aims to offer lower volatility with an options overlay strategy, combined with meaningful SGD exposure, that is designed to help reduce portfolio volatility from market fluctuations, and currency movements for SGD investors.
While it is an income-focused strategy, the fund also invests in constructive themes driving Asian equities, including the recovery and growth in China and India, and the positive outlook for APAC tech companies. Some of these opportunities may currently have lower dividend yields but have the potential to deliver higher total returns in the future as a result of growth and/or improved free cashflow generation.
The fund is managed by Singapore-based equity portfolio managers Pauline Ng and Changqi Ong, supported by a seasoned team with over 15 years of proven expertise in generating alpha across ASEAN equity and Asian income strategies, and further strengthened by a dedicated derivative group headed by Stuart O’Neill.
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“Singapore’s equity market is home to high-yielding stocks across market caps and sectors, and we are excited to bring a differentiated solution that leverages these opportunities,” says Pauline Ng, head of ASEAN equity team, emerging markets & Asia Pacific equities at JPMAM. “Asia’s equity market, notably including Singapore, offers a favourable environment for income investing. Around the wider region this includes options overwriting: typically, higher implied volatility translates to higher option premiums, which we seek to deliver by selling call options on local market indices. Our approach combines dividends from Singapore and Asian stocks with options premiums and capital appreciation, providing investors with a multi-pronged strategy for total returns.”
Over the past decade, JPMAM’s equity high income approach has recorded higher income, lower volatility, and equity-like returns compared to a traditional 50-50 equity mix. The equity high income product suite now spans global, European, Asian, and dedicated Chinese equity markets.
Ayaz Ebrahim, CEO of Singapore and South East Asia at JPMAM, comments: “As the first global manager appointed by the MAS under the landmark EQDP initiative, we are proud to introduce our globally successful equity high income strategy to help Singapore investors unlock more income opportunities and support the revitalisation of the local equity market. We look forward to working alongside the MAS, industry peers and investors to deepen market liquidity, broaden investor participation, and contribute to the continued advancement of Singapore’s asset management landscape.”
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Thus far, two EQDP funds have been launched – Avanda Investment Management’s Avanda Singapore Discovery Fund and Fullerton Fund Management’s Fullerton Singapore Value-Up (FSGV). With JPMAM’s launch, all three appointed asset managers from the first trache have launched their funds.
Lion Global Investors (LGI), selected in the second tranche, on the other hand decided to allocate its portion of the EQDP allocation into an existing fund – LionGlobal Singapore Trust Fund – which has a track record of over 10 years.
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