Nobile believed that JPST can act as a core complement strategy within the so-called JPM Fixed Income Triangle, which includes extended sectors, a core complement and core holdings. Something like JPST would help lower volatility or hedge downside risk and reduce portfolio duration. The strategy’s primary opportunity moves money out the curve to earn extra yield while its secondary opportunity moves money down the curve in the face of rising rates and a flat yield curve environment.
JPST provides “current income with a focus on risk management,” Nobile said.
JPST can also act as an attractive money market alternative. The fund exhibits an ultra-short duration of 0.45 years with a 2.90% yield, or a yield that is 39 basis points higher than the JPM Prime Money Market Fund. Additionally, investors are receiving an attractive, competitive yield at a lower risk than traditional bond funds. The benchmark Bloomberg Barclays U.S. Aggregate Bond Index shows a 3.15% and a 6.17 year duration, so JPST captures 92% of the index’s yield with only 7% of the duration.
Financial advisors who are interested in learning more about short-duration bond strategies can watch the webcast here on demand.