TWUSUPER has awarded J.P. Morgan Asset Management a significant global bond mandate as the super fund looks to adapt its strategy to the Your Future, Your Super (YFYS) reforms.
The mandate will see TWUSUPER invest in the recently launched JPMorgan Global Bond Fund, described as a high conviction diversified portfolio that invests in global investment grade bonds.
“Our changes are motivated by a plan to refresh our investment strategy and adapt to YFYS, actively working to manage costs and tracking error while enhancing returns in a transformation programme over the last two years,” said TWUSUPER CIO Edward Smith.
J.P. Morgan AM said that the YFYS reforms had changed the way that super funds invest, driving them to seek new ways to outperform as competition increases across the industry.
The firm launched its JPMorgan Global Bond Fund earlier in June with a stated focus on income, diversification and managing volatility.
“In response to clients’ demand, we purposely brought to market a bond fund which is well positioned to navigate this changing landscape, that is focused to deliver diversified fixed income exposure with multiple levers for generating performance with a risk-controlled approach,” said J.P. Morgan AM Australia and New Zealand CEO Andrew Creber.
“We believe this solution meets the needs of our investors, particularly in light of the market environment and research we undertook with NMG Consulting around the impact of YFYS reforms on super funds.”
Along with the JPMorgan Income Fund launched in March this year, J.P. Morgan AM said that its suite of fixed income solutions formed a significant focus for the firm.
“With investors facing new challenges from slowing economic growth momentum and persistent inflation, the rise in bond yields has created value in bond markets and re-invigorated their role as diversifier in portfolios,” Mr Creber said.
In April, research commission by J.P. Morgan AM found that super funds may adopt more conservative investment approaches due to the annual performance test introduced under the YFYS reforms with a potential impact on long-term returns.
As a result of the new regulations, J.P. Morgan found that strategies in listed assets were set to become more benchmark aware, with high alpha strategies requiring higher degrees of conviction and thus resulting in smaller allocations.
