Why Risk Assets Will Pay Dividends

Given how asset prices have moved over the past 18 months, investors should be cautious. However there are macro fundamentals which support a risky stance

J.P. Morgan Asset Management 24 June, 2014 | 11:33AM
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This article is part of Morningstar's "Perspectives" series, written by third-party contributors. Here, Talib Sheikh, manager of the JPM Multi-Asset Income Fund, explains the macro-economic factors driving his conviction in risk assets as a source of income and returns.

For investors seeking the best global ideas for income investing, today’s market environment is supportive for risk assets, particularly compared to bonds.  We remain pro-risk but given how asset prices have moved over the past 18 months, we have become more cautious. Let’s explore three macro-economic reasons for such a stance on risk assets and the implications for income investors across a global opportunity set.

Low but Positive Economic Growth

We continue to look for an acceleration in global growth, led by stronger activity in the US and Europe. Global equity markets have continued their upward trend as volatility across many asset classes remains relatively low. The US continues to add to jobs at a rate of over 200,000 a month for the last three months. This backdrop of a healing global economic environment is broadly supportive of risk assets.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

J.P. Morgan Asset Management  is the investment arm of JPMorgan Chase & Co. and it is one of the largest active asset managers in the world.