Singapore, Asia equities with high yields, growth potential focus of JPMAM’s MAS EQDP fund strategy

[SINGAPORE] JP Morgan Asset Management (JPMAM) intends to focus on small- and mid-cap (SMID) Singapore stocks, as well as high-yielding markets in the Asia-Pacific, to revitalise investor interest in local equities.

The fund strategy, announced at the asset manager’s third-quarter outlook briefing on Tuesday (Jul 29), is part of the Equity Market Development Programme (EQDP) led by the Monetary Authority of Singapore (MAS).

The SMID slant aligns with the EQDP’s goals of spurring interest in Singapore equities as well as attracting “new third-party capital”, noted Pauline Ng, head of the Asean team at JPMAM’s emerging markets and Apac equities division.

MAS earlier this month highlighted the importance of fund strategies in improving liquidity and broadening participation in Singapore equities. It also cited the need for significant allocation to SMID stocks.

JPMAM is among the first three asset managers selected by MAS to manage a combined initial sum of S$1.1 billion; a total of S$5 billion has been allocated for the EQDP. Fullerton Fund Management and Avanda Investment Management are the two other fund managers in this batch.

Ng and JPMAM’s Asean equities investment manager Ong Chang Qi will lead the fund strategy, supported by the American asset manager’s derivatives capability.

JPMAM chose not to reveal the name of the fund or specify capital allocation amounts at its Q3 2025 outlook briefing.

However, it noted that what differentiates its fund strategy from existing offerings in the Singapore market is its income-focused approach.

“The aim is to generate consistent and high income, providing investors with stable income during periods of market volatility, while maintaining capital appreciation prospects (with) Asia and Singapore equities,” Ng told The Business Times.

Fullerton Fund Management has said that its Singapore equities unit trust will be invested in Singapore Exchange-listed stocks across various market capitalisations.

Avanda Investment Management’s Avanda Singapore Discovery Fund, meanwhile, will prioritise SMID stocks which cover the areas of “value-up, local champions and turnaround”.

Interest in other Apac markets

As one of the highest-yielding markets in Apac, Singapore will no doubt be the core focus of JPMAM’s fund strategy.

Singapore equities “actually compound at the return more than Apac”, said Ng. This is partly because the local banks form “a very large part of the MSCI Singapore Index, which drives its overall return”.

She cited DBS as an example: to intensify its income, the lender has altered its business model to be less capital-intensive and more focused on wealth management and fees.

Nonetheless, JPMAM’s fund will also invest in other high-yield markets within the region, including Indonesia, Hong Kong and Australia, said Ng.

South Korea is also an “interesting market” to the asset manager, she added. “Although the overall level of dividend yield remains relatively low, payouts and share buybacks are increasing on the back of the government-led value-up plan. Therefore, we are seeing more interesting bottom-up investment opportunities.”

Ng declined to share specifics on the allocations to these Apac markets. However, she said JPMAM will consider a variety of sectors, including consumer services, telecommunications, financial services and real estate investment trusts.

Capital appreciation prospects also valued

Although high dividends are top of mind for JPMAM, they are not the only criteria within its fund strategy. The asset manager will also prioritise picks that demonstrate a positive growth trajectory.

“The strategy also allows us to participate in capital appreciation prospects in Singapore and Asia,” said Ng in response to queries from BT. “Some of these opportunities may have lower dividend yields now, but we expect higher dividends in the future as a result of growth or improved free cash-flow generation.”

She noted that Asean equities have recently displayed growth, with Vietnam’s benchmark index up 36 per cent from its low in April, though the country is not yet considered an emerging market by MSCI.

Ng also cited US-listed Sea and Grab as “Asean champions” which “have the right to not be looked over”.

Yet, the current state of regional equities could bring about advantages too, she said, explaining that a long-term investor’s entry point could determine the level of annualised return.

“The advantage and attraction of Asean equities are how they have been (so ignored and under-owned that) their valuations are very attractive compared to their own history, and relative to the US and some other markets,” she added.