Investment Strategy

Four reasons to consider private credit despite the headlines

In September, we laid out a high-conviction view on private credit. These are loans extended by an asset manager (rather than a bank) to corporate borrowers. We were especially enthusiastic about a subcategory of private credit, direct lending. J.P. Morgan Asset Management’s 2024 Long-Term Capital Market Assumptions (LTCMAs) suggested direct lending would likely deliver annual total returns in excess of 8.5% over the next decade; we continue to think performance can be higher in the coming year.1

Last year, performance was solid overall, with the Cliffwater Direct Lending Index2 clocking a total return of 12% in 2023. Yet there has been a steady drip of negative headlines about the space. Skeptics worry that investors may misjudge the balance of risk and reward in the fast-growing private credit sector.

We think those concerns are overstated. While there is risk of default, and direct lending may not be appropriate for all investors, in this piece, we discuss the four reasons why we continue to have a constructive view on direct lending.

1. Direct lending yields still stand out.

Recession fears have receded over the last six to nine months. Because investors are less concerned about a recession and an accompanying increase in loan defaults, public market credit spreads, which are the excess compensation investors receive for default risk, have fallen to historically low levels. High yield and investment grade spreads, for example, are trading at their tightest levels since 2010.

Leveraged (or syndicated) loans stand out in public corporate credit because they are still offering investors solid compensation. Leveraged loans are very similar to direct loans, with the notable difference that leveraged loans are tradeable securities and direct loans are not. We believe in exchange for less liquidity; direct lending offers investors 250 basis points of yield, per annum, above leveraged loans.

In public extended credit, loans are the one space still offering spread

Credit spread percentile and level since 2010

This shows the percentile of current corporate credit spreads since 2010 for the high yield market and leverage loan market at both the index level and credit ratings buckets.
Sources: Bloomberg Finance L.P., J.P. Morgan Private Bank. Data as of April 11, 2024.

Recent direct loan deals yield about 250bp wide of public markets

Yield %

This shows yield across extended credit markets since January of 2022, including high yield, leveraged loan and direct lending new deals.
Source: J.P. Morgan. Data as of March 2024. Note: YTM includes original issue discount.

2. Loan growth appears to be healthy, not bubble-esque

Direct lending has captured headlines as the fast-growing upstart of the leveraged finance world. Some investors worry growth is out of control, and that companies of questionable quality are taking on too much debt. We think the facts say otherwise.

The direct loan market is often cited to be $1.7 trillion in total loans outstanding. This would put it roughly on par with the more established U.S. high yield and leveraged loan markets, but that number is misleading for two reasons.

First, the $1.7 trillion estimate is global and includes loans originated outside of the United States, whereas high yield and leveraged loans are U.S. only. 

Second, the $1.7 trillion estimate includes a great deal of dry powder and other specialized strategies, such as distressed debt. Dry powder is capital that is invested with an asset manager, but is not yet lent out.

If we just focus on the United States and remove dry powder, we estimate outstanding direct loans in the United States to $475 billion, compared to total principal value of $925 billion for domestic high yield and $1.4 trillion for the USD Leveraged Loan Index (as of 2Q23).

The direct loan market is smaller than many assume.

It’s also important that, since 2010, leveraged financial debt has grown at the same pace as economy-wide nonfinancial corporate profits. This implies that the leveraged debt ecosystem has not grown too fast for the corporate sector. Instead, it has kept pace with the economy—and with companies’ ability to pay.

Within that ecosystem, direct lending has been taking market share from high yield and leveraged loans. Direct lending’s share of leveraged finance has grown to 17% as of the second quarter of 2023, from 7% in 2018.

Leveraged debt (including direct lending) has kept pace with profits

Aggregate leveraged borrowing vs nonfin domestic corporate Profits, Indexed to 100 at YE 2009

This shows growth since 2010 in aggregate leveraged financial debt outstanding (the sum of North American direct lending invested capital, total domestic high yield par value, and total domestic leveraged loan par value) and nonfinancial corporate profits.
Sources: BEA, J.P. Morgan, Preqin, J.P. Morgan Private Bank. Data as of 2Q 2023. Leveraged borrowing = Nor American private credit excluding dry powder, JPM leverage loan index par value, JPM Domestic high yield par value

3. Underwriting standards and fundamentals are solid

While lending standards have loosened a bit recently, suggesting lenders are not receiving as much compensation for a unit of risk, those standards remain still solid overall. Average net leverage for borrowers–a key financial health metric that compares net debt to earnings before interest, taxes, depreciation and amortization–has increased recently, but remains well below 2021 and early 2022 levels.

Furthermore, risky "covenant-lite” loans (which come with less protection for lenders) are not prevalent in direct lending deals. After analyzing a proprietary set of our J.P. Morgan Investment Bank data, we've found that only about 20% of direct lending deals completed during the last 12 months are covenant-lite. By contrast, about 90% of syndicated loans are covenant-lite.

Leverage on new direct lending deals has declined

Net debt to EBITDA for new direct loan deals

This shows net leverage (net debt relative to EBITDA) for new direct lending deals since January of 2021 on a monthly and three month average basis.
Source: J.P. Morgan. Data as of March 2024. EBITDA = earnings before interest, taxes, depreciation and amortization.

Covenant-lite loans are not prevalent in direct lending deals

% of new deals issued over the last 12 months

Source: J.P. Morgan Investment Bank. Data as of February 28, 2024.

Still, trends in the leveraged loan market may give us a clue about how fundamentals might be evolving for direct loan issuers. Overall, leverage loan fundamentals have fared better than we would have expected following the most aggressive Federal Reserve hiking cycle in decades.

For example, consider the median interest coverage ratio. It’s an important measurement of financial health that divides earnings by interest owed, and helps determine borrowers’ ability to pay. It’s fallen from recent highs of 2.6x in the first quarter of 2022, but stabilized in mid-2023 at levels below pre-COVID trends.3

 

 

Private loan interest coverage ratios have declined

Median interest coverage ratios by companies that issue in the leveraged loan market

This shows interest coverage ratios (EBITDA to net interest expense) for the broadly syndicated loan market, separating public companies from private companies since 1Q 2019.
Source: J.P. Morgan Investment Bank. Data as of September 30, 2023. Interest coverage = EBITDA/interest expense.

4. Defaults may rise further. We think investors may be well compensated for the risk.

Following the spike in borrowing rates over the past two years, defaults rose in public markets. However, they did so from extremely low levels. The increase only brought default rates back to their long-term median.

Direct lending losses match high yield and leveraged loans

Annual credit losses by asset class (%)

This shows annual credit losses (default rate – recovery rate) for the high yield, broadly syndicated loan, and direct lending markets since 2005.
Sources: Cliffwater, J.P. Morgan Private Bank. Data as of December 31, 2023. Credit losses = defaults adjusted for value recovered.

Investor credit losses are driven by default rates and by the recovery rate (the value of the assets in the event of default). Historically, credit losses in direct loans have tended to match losses in the high yield and leveraged loan markets.4 Realized losses in the Cliffwater Direct Lending Index measured 0.9% in 2023. This is consistent with about a 2% default rate using a 50% recovery rate.

Defaults are a fact of life in leveraged finance and it is possible defaults will increase further as debt costs rose following rate hikes by the Fed. Still, with we think investors may be well-compensated for that risk.

Bearing this in mind, we think staying attuned to a couple of important pitfalls can help improve investors’ chances of success in this space.

What to watch out for:

  • Concentration in direct lending loans originated in 2021/2022. We are especially concerned about the 2021/2022 vintage of loans, as they were underwritten with higher leverage and their terms may have been based on expectations for a lower interest rate environment.
  • Asset managers that lack robust and transparent valuation processes. Because direct loans are private, their valuations may be written down more slowly than similar publicly traded products. This may translate to higher fees for investors compared to public market loans.

A recent private credit primer from the Fed cited KBRA data that showed loan valuations in direct lending, syndicated loans and high yield in the lead-up to a default/recovery negotiation. Over the 12 months ending March 2024, only 17 borrowers in KBRA’s direct lending sample defaulted (or had implied recoveries),5 compared to 76 syndicated loan defaults and 37 defaults by high yield borrowers. The data showed direct lending valuations lagged those of syndicated loans and high yield in the lead-up to default. However, it is critical to note that direct lending and syndicated loans had similar ending valuations, both above high yield bonds.

TTM average post-default values, unweighted

(%)

This shows the valuation of direct lending, syndicated loan, and HY bonds in the 12 months leading up to defaults.
Sources: KBRA DLD, Solve. Note: Direct lending 30-day post-default levels are taken using the default date.
  • Loan concentration in certain sectors. Per KBRA, more than one-third of direct loans are issued to software or healthcare companies. We preach diversification, and it's critical here.

Investors remain skeptical of private credit, suggesting the asset class has grown too fast or looks too risky. We think those concerns are overstated.

Speak with your J.P. Morgan team to explore whether investing in private credit would support your long-term financial goals.

 

12024 J.P. Morgan Asset Management Long-Term Capital Markets Assumptions. As of Dec. 31, 2023.

2The Cliffwater Direct Lending Index (“CDLI”) seeks to measure the unlevered, gross of fees performance of U.S. middle market corporate loans, as represented by the underlying assets of Business Development Companies (“BDCs”), including both exchange-traded and unlisted BDCs, subject to certain eligibility criteria. The CDLI is asset-weighted index consisting of 14,800 loans and calculated quarterly using financial statements and other information contained in the U.S. Securities and Exchange Commission (“SEC”) filings of all eligible BDCs. Past performance is no guarantee of future results. It is not possible to invest directly in an index.

3J.P. Morgan leveraged loan data. Data as of September 30, 2023

4Source: Cliffwater. Data as of 3Q 2023.

5KBRA Direct Lending Data has curated an Index of roughly 2,400 U.S. companies, split between more than 1,700 sponsored and more than 600 non-sponsored borrowers. Uses Credit Suisse Leveraged Loan Index and ICE BofA U.S. High Yield Index.

Some investors say direct lending has grown too fast or looks too risky. We think the asset class is still appealing.

EXPERIENCE THE FULL POSSIBILITY OF YOUR WEALTH

We can help you navigate a complex financial landscape. Reach out today to learn how.

Contact us
Important Information

Private credit securities may be illiquid, present significant risks, and may be sold or redeemed at more or less than the original amount invested. There may be a heightened risk that private credit issuers and counterparties will not make payments on securities, repurchase agreements or other investments. Such defaults could result in losses to the strategy. In addition, the credit quality of securities held by the strategy may be lowered if an issuer’s financial condition changes. Lower credit quality may lead to greater volatility in the price of a security and in shares of the strategy. Lower credit quality also may affect liquidity and make it difficult for the strategy to sell the security. Private credit securities may be rated in the lowest investment grade category or not rated. Such securities are considered to have speculative characteristics similar to high yield securities, and issuers of such securities are more vulnerable to changes in economic conditions than issuers of higher-grade securities.

Key Risks

This material is for informational purposes only, and may inform you of certain products and services offered by private banking businesses, part of JPMorgan Chase & Co. (“JPM”). Products and services described, as well as associated fees, charges and interest rates, are subject to change in accordance with the applicable account agreements and may differ among geographic locations. Not all products and services are offered at all locations. If you are a person with a disability and need additional support accessing this material, please contact your J.P. Morgan team or email us at accessibility.support@jpmorgan.com for assistance. Please read all Important Information.

J.P. Morgan Asset Management Long Term Capital Market Assumptions

Given the complex risk-reward trade-offs involved, we advise clients to rely on judgment as well as quantitative optimization approaches in setting strategic allocations. Please note that all information shown is based on qualitative analysis. Exclusive reliance on the above is not advised. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. Note that these asset class and strategy assumptions are passive only – they do not consider the impact of active management. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Assumptions, opinions and estimates are provided for illustrative purposes only. They should not be relied upon as recommendations to buy or sell securities. Forecasts of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material has been prepared for information purposes only and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. The outputs of the assumptions are provided for illustration/discussion purposes only and are subject to significant limitations.

“Expected” or “alpha” return estimates are subject to uncertainty and error. For example, changes in the historical data from which it is estimated will result in different implications for asset class returns. Expected returns for each asset class are conditional on an economic scenario; actual returns in the event the scenario comes to pass could be higher or lower, as they have been in the past, so an investor should not expect to achieve returns similar to the outputs shown herein. References to future returns for either asset allocation strategies or asset classes are not promises of actual returns a client portfolio may achieve. Because of the inherent limitations of all models, potential investors should not rely exclusively on the model when making a decision. The model cannot account for the impact that economic, market, and other factors may have on the implementation and ongoing management of an actual investment portfolio. Unlike actual portfolio outcomes, the model outcomes do not reflect actual trading, liquidity constraints, fees, expenses, taxes and other factors that could impact the future returns. The model assumptions are passive only – they do not consider the impact of active management. A manager’s ability to achieve similar outcomes is subject to risk factors over which the manager may have no or limited control.

The views contained herein are not to be taken as advice or a recommendation to buy or sell any investment in any jurisdiction, nor is it a commitment from J.P. Morgan Asset Management or any of its subsidiaries to participate in any of the transactions mentioned herein. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit and accounting implications and determine, together with their own financial professional, if any investment mentioned herein is believed to be appropriate to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yield are not a reliable indicator of current and future results.

General Risks & Considerations

Any views, strategies or products discussed in this material may not be appropriate for all individuals and are subject to risks. Investors may get back less than they invested, and past performance is not a reliable indicator of future results. Asset allocation/diversification does not guarantee a profit or protect against loss. Nothing in this material should be relied upon in isolation for the purpose of making an investment decision. You are urged to consider carefully whether the services, products, asset classes (e.g., equities, fixed income, alternative investments, commodities, etc.) or strategies discussed are suitable to your needs. You must also consider the objectives, risks, charges, and expenses associated with an investment service, product or strategy prior to making an investment decision. For this and more complete information, including discussion of your goals/situation, contact your J.P. Morgan team.

Non-Reliance

Certain information contained in this material is believed to be reliable; however, JPM does not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. No representation or warranty should be made with regard to any computations, graphs, tables, diagrams or commentary in this material, which are provided for illustration/ reference purposes only. The views, opinions, estimates and strategies expressed in this material constitute our judgment based on current market conditions and are subject to change without notice. JPM assumes no duty to update any information in this material in the event that such information changes. Views, opinions, estimates and strategies expressed herein may differ from those expressed by other areas of JPM, views expressed for other purposes or in other contexts, and this material should not be regarded as a research report. Any projected results and risks are based solely on hypothetical examples cited, and actual results and risks will vary depending on specific circumstances. Forward-looking statements should not be considered as guarantees or predictions of future events.

Nothing in this document shall be construed as giving rise to any duty of care owed to, or advisory relationship with, you or any third party. Nothing in this document shall be regarded as an offer, solicitation, recommendation or advice (whether financial, accounting, legal, tax or other) given by J.P. Morgan and/or its officers or employees, irrespective of whether or not such communication was given at your request. J.P. Morgan and its affiliates and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transactions.

IMPORTANT INFORMATION ABOUT YOUR INVESTMENTS AND POTENTIAL CONFLICTS OF INTEREST

Conflicts of interest will arise whenever JPMorgan Chase Bank, N.A. or any of its affiliates (together, “J.P. Morgan”) have an actual or perceived economic or other incentive in its management of our clients’ portfolios to act in a way that benefits J.P. Morgan. Conflicts will result, for example (to the extent the following activities are permitted in your account): (1) when J.P. Morgan invests in an investment product, such as a mutual fund, structured product, separately managed account or hedge fund issued or managed by JPMorgan Chase Bank, N.A. or an affiliate, such as J.P. Morgan Investment Management Inc.; (2) when a J.P. Morgan entity obtains services, including trade execution and trade clearing, from an affiliate; (3) when J.P. Morgan receives payment as a result of purchasing an investment product for a client’s account; or (4) when J.P. Morgan receives payment for providing services (including shareholder servicing, recordkeeping or custody) with respect to investment products purchased for a client’s portfolio. Other conflicts will result because of relationships that J.P. Morgan has with other clients or when J.P. Morgan acts for its own account.

Investment strategies are selected from both J.P. Morgan and third-party asset managers and are subject to a review process by our manager research teams. From this pool of strategies, our portfolio construction teams select those strategies we believe fit our asset allocation goals and forward-looking views in order to meet the portfolio’s investment objective.

As a general matter, we prefer J.P. Morgan managed strategies. We expect the proportion of J.P. Morgan managed strategies will be high (in fact, up to 100 percent) in strategies such as, for example, cash and high-quality fixed income, subject to applicable law and any account-specific considerations.

While our internally managed strategies generally align well with our forward-looking views, and we are familiar with the investment processes as well as the risk and compliance philosophy of the firm, it is important to note that J.P. Morgan receives more overall fees when internally managed strategies are included. We offer the option of choosing to exclude J.P. Morgan managed strategies (other than cash and liquidity products) in certain portfolios.

The Six Circles Funds are U.S.-registered mutual funds managed by J.P. Morgan and sub-advised by third parties. Although considered internally managed strategies, JPMC does not retain a fee for fund management or other fund services.

Legal Entity, Brand & Regulatory Information

In the United States, bank deposit accounts and related services, such as checking, savings and bank lending, are offered by JPMorgan Chase Bank, N.A. Member FDIC.

JPMorgan Chase Bank, N.A. and its affiliates (collectively “JPMCB”) offer investment products, which may include bank-managed investment accounts and custody, as part of its trust and fiduciary services. Other investment products and services, such as brokerage and advisory accounts, are offered through J.P. Morgan Securities LLC (“JPMS”), a member of FINRA and SIPC. Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. JPMCB, JPMS and CIA are affiliated companies under the common control of JPM. Products not available in all states.

In Germany, this material is issued by J.P. Morgan SE, with its registered office at Taunustor 1 (TaunusTurm), 60310 Frankfurt am Main, Germany, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB). In Luxembourg, this material is issued by J.P. Morgan SE—Luxembourg Branch, with registered office at European Bank and Business Centre, 6 route de Treves, L-2633, Senningerberg, Luxembourg, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE—Luxembourg Branch is also supervised by the Commission de Surveillance du Secteur Financier (CSSF); registered under R.C.S Luxembourg B255938. In the United Kingdom, this material is issued by J.P. Morgan SE—London Branch, registered office at 25 Bank Street, Canary Wharf, London E14 5JP, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE—London Branch is also supervised by the Financial Conduct Authority and Prudential Regulation Authority. In Spain, this material is distributed by J.P. Morgan SE, Sucursal en España, with registered office at Paseo de la Castellana, 31, 28046 Madrid, Spain, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE, Sucursal en España is also supervised by the Spanish Securities Market Commission (CNMV); registered with Bank of Spain as a branch of J.P. Morgan SE under code 1567. In Italy, this material is distributed by J.P. Morgan SE—Milan Branch, with its registered office at Via Cordusio, n.3, Milan 20123, Italy, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE—Milan Branch is also supervised by Bank of Italy and the Commissione Nazionale per le Società e la Borsa (CONSOB); registered with Bank of Italy as a branch of J.P. Morgan SE under code 8076; Milan Chamber of Commerce Registered Number: REA MI 2536325. In the Netherlands, this material is distributed by J.P. Morgan SE—Amsterdam Branch, with registered office at World Trade Centre, Tower B, Strawinskylaan 1135, 1077 XX, Amsterdam, The Netherlands, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE—Amsterdam Branch is also supervised by De Nederlandsche Bank (DNB) and the Autoriteit Financiële Markten (AFM) in the Netherlands. Registered with the Kamer van Koophandel as a branch of J.P. Morgan SE under registration number 72610220. In Denmark, this material is distributed by J.P. Morgan SE—Copenhagen Branch, filial af J.P. Morgan SE, Tyskland, with registered office at Kalvebod Brygge 39-41, 1560 København V, Denmark, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE—Copenhagen Branch, filial af J.P. Morgan SE, Tyskland is also supervised by Finanstilsynet (Danish FSA) and is registered with Finanstilsynet as a branch of J.P. Morgan SE under code 29010. In Sweden, this material is distributed by J.P. Morgan SE—Stockholm Bankfilial, with registered office at Hamngatan 15, Stockholm, 11147, Sweden, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE—Stockholm Bankfilial is also supervised by Finansinspektionen (Swedish FSA); registered with Finansinspektionen as a branch of J.P. Morgan SE. In Belgium, this material is distributed by J.P. Morgan SE—Brussels Branch with registered office at 35 Boulevard du Régent, 1000, Brussels, Belgium, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE Brussels Branch is also supervised by the National Bank of Belgium (NBB) and the Financial Services and Markets Authority (FSMA) in Belgium; registered with the NBB under registration number 0715.622.844. In Greece, this material is distributed by J.P. Morgan SE—Athens Branch, with its registered office at 3 Haritos Street, Athens, 10675, Greece, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE—Athens Branch is also supervised by Bank of Greece; registered with Bank of Greece as a branch of J.P. Morgan SE under code 124; Athens Chamber of Commerce Registered Number 158683760001; VAT Number 99676577. In France, this material is distributed by J.P. Morgan SE—Paris Branch, with its registered office at 14, Place Vendôme 75001 Paris, France, authorized by the Bundesanstaltfür Finanzdienstleistungsaufsicht(BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB) under code 842 422 972; J.P. Morgan SE—Paris Branch is also supervised by the French banking authorities the Autorité de Contrôle Prudentiel et de Résolution (ACPR) and the Autorité des Marchés Financiers (AMF). In Switzerland, this material is distributed by J.P. Morgan (Suisse) SA, with registered address at rue du Rhône, 35, 1204, Geneva, Switzerland, which is authorized and supervised by the Swiss Financial Market Supervisory Authority (FINMA) as a bank and a securities dealer in Switzerland.

This communication is an advertisement for the purposes of the Markets in Financial Instruments Directive (MIFID II) and the Swiss Financial Services Act (FINSA). Investors should not subscribe for or purchase any financial instruments referred to in this advertisement except on the basis of information contained in any applicable legal documentation, which is or shall be made available in the relevant jurisdictions (as required).

In Hong Kong, this material is distributed by JPMCB, Hong Kong branch. JPMCB, Hong Kong branch is regulated by the Hong Kong Monetary Authority and the Securities and Futures Commission of Hong Kong. In Hong Kong, we will cease to use your personal data for our marketing purposes without charge if you so request. In Singapore, this material is distributed by JPMCB, Singapore branch. JPMCB, Singapore branch is regulated by the Monetary Authority of Singapore. Dealing and advisory services and discretionary investment management services are provided to you by JPMCB, Hong Kong/Singapore branch (as notified to you). Banking and custody services are provided to you by JPMCB Singapore Branch. The contents of this document have not been reviewed by any regulatory authority in Hong Kong, Singapore or any other jurisdictions. You are advised to exercise caution in relation to this document. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice. For materials which constitute product advertisement under the Securities and Futures Act and the Financial Advisers Act, this advertisement has not been reviewed by the Monetary Authority of Singapore. JPMorgan Chase Bank, N.A., a national banking association chartered under the laws of the United States, and as a body corporate, its shareholder’s liability is limited.

With respect to countries in Latin America, the distribution of this material may be restricted in certain jurisdictions. We may offer and/or sell to you securities or other financial instruments which may not be registered under, and are not the subject of a public offering under, the securities or other financial regulatory laws of your home country. Such securities or instruments are offered and/or sold to you on a private basis only. Any communication by us to you regarding such securities or instruments, including without limitation the delivery of a prospectus, term sheet or other offering document, is not intended by us as an offer to sell or a solicitation of an offer to buy any securities or instruments in any jurisdiction in which such an offer or a solicitation is unlawful. Furthermore, such securities or instruments may be subject to certain regulatory and/or contractual restrictions on subsequent transfer by you, and you are solely responsible for ascertaining and complying with such restrictions. To the extent this content makes reference to a fund, the Fund may not be publicly offered in any Latin American country, without previous registration of such fund’s securities in compliance with the laws of the corresponding jurisdiction.

JPMorgan Chase Bank, N.A. (JPMCBNA) (ABN 43 074 112 011/AFS Licence No: 238367) is regulated by the Australian Securities and Investment Commission and the Australian Prudential Regulation Authority. Material provided by JPMCBNA in Australia is to “wholesale clients” only. For the purposes of this paragraph the term “wholesale client” has the meaning given in section 761G of the Corporations Act 2001 (Cth). Please inform us if you are not a Wholesale Client now or if you cease to be a Wholesale Client at any time in the future.

JPMS is a registered foreign company (overseas) (ARBN 109293610) incorporated in Delaware, U.S.A. Under Australian financial services licensing requirements, carrying on a financial services business in Australia requires a financial service provider, such as J.P. Morgan Securities LLC (JPMS), to hold an Australian Financial Services Licence (AFSL), unless an exemption applies. JPMS is exempt from the requirement to hold an AFSL under the Corporations Act 2001 (Cth) (Act) in respect of financial services it provides to you, and is regulated by the SEC, FINRA and CFTC under U.S. laws, which differ from Australian laws. Material provided by JPMS in Australia is to “wholesale clients” only. The information provided in this material is not intended to be, and must not be, distributed or passed on, directly or indirectly, to any other class of persons in Australia. For the purposes of this paragraph the term “wholesale client” has the meaning given in section 761G of the Act. Please inform us immediately if you are not a Wholesale Client now or if you cease to be a Wholesale Client at any time in the future.

This material has not been prepared specifically for Australian investors. It:

  • May contain references to dollar amounts which are not Australian dollars;
  • May contain financial information which is not prepared in accordance with Australian law or practices;
  • May not address risks associated with investment in foreign currency denominated investments; and
  • Does not address Australian tax issues.

References to “J.P. Morgan” are to JPM, its subsidiaries and affiliates worldwide. “J.P. Morgan Private Bank” is the brand name for the private banking business conducted by JPM. This material is intended for your personal use and should not be circulated to or used by any other person, or duplicated for non-personal use, without our permission. If you have any questions or no longer wish to receive these communications, please contact your J.P. Morgan team.

© 2024 JPMorgan Chase & Co. All rights reserved.

LEARN MORE About Our Firm and Investment Professionals Through FINRA Brokercheck

 

To learn more about J.P. Morgan’s investment business, including our accounts, products and services, as well as our relationship with you, please review our J.P. Morgan Securities LLC Form CRS and Guide to Investment Services and Brokerage Products

 

JPMorgan Chase Bank, N.A. and its affiliates (collectively "JPMCB") offer investment products, which may include bank-managed accounts and custody, as part of its trust and fiduciary services. Other investment products and services, such as brokerage and advisory accounts, are offered through J.P. Morgan Securities LLC ("JPMS"), a member of FINRA and SIPC. Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. JPMCB, JPMS and CIA are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.

 

Please read the Legal Disclaimer for key important J.P. Morgan Private Bank information in conjunction with these pages.

INVESTMENT AND INSURANCE PRODUCTS ARE: • NOT FDIC INSURED • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY • NOT A DEPOSIT OR OTHER OBLIGATION OF, OR GUARANTEED BY, JPMORGAN CHASE BANK, N.A. OR ANY OF ITS AFFILIATES • SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED

Bank deposit products, such as checking, savings and bank lending and related services are offered by JPMorgan Chase Bank, N.A. Member FDIC.

Not a commitment to lend. All extensions of credit are subject to credit approval.

Equal Housing Lender Icon