London – J.P. Morgan Asset Management’s Global Liquidity business has launched a new UCITS fund, JPMorgan Funds – Sterling Managed Reserves Fund.
Whereas traditional money market funds are designed to meet short-term working capital requirements, managed and regulated extremely conservatively to ensure capital preservation and liquidity at all times, Managed Reserves strategies incrementally extend maturities to generate slightly higher returns, but with a similar discipline on risk management. For liquidity investors with a longer investment horizon, Managed Reserves can offer an interesting cash alternative: returns above money market funds coupled with a focus on capital preservation and liquidity.
JPMorgan Funds – Sterling Managed Reserves Fund will seek to deliver consistent returns while preserving principal and providing liquidity. It will invest in GBP-denominated short-term debt securities, including commercial paper, certificates of deposit, bank deposits and AAA rated money market funds, as well as UK and European sovereigns, Supranationals and Agencies, corporate securities and asset- and mortgage-backed securities. The fund’s weighted average duration will not exceed one year.
“Treasurers are being forced to rethink short-term investment strategies. Following Brexit the Bank of England’s bank rate and corresponding cash yields are down to record lows – and likely to go even lower – so liquidity investors are increasingly being more strategic with their non-immediate cash. A Managed Reserves strategy, which can take advantage of higher yields in maturities slightly longer than money market funds, can be an effective supplement in this environment to AAA rated liquidity funds,” said Neil Hutchison, Portfolio Manager, JPMorgan Funds – Sterling Managed Reserves Fund.
The fund, which will be benchmarked to the BofAML Sterling 3-Month Government Bill Index, will target an excess return of 20 to 40 basis points, net of all fees. Lead Portfolio Manager Neil Hutchison has 18 years of industry experience.
“Having globally managed portfolios to this strategy since 2004, with $50 billion in Managed Reserves assets already under management, we’ve observed the evolution in cash segmentation that corporate treasurers are increasingly undertaking. Allocating a portion of non-immediate cash to Managed Reserves, often as a first step beyond money market funds, can allow cash investors to benefit from a broader investible universe with greater corporate diversity, all within a highly risk controlled environment,” said Hutchison.