J.P. Morgan Asset Management (JPMAM) has launched two Europe-focused funds that will capitalize on opportunities in the European market.

It launched the JPMorgan Europe Strategic Dividend Fund and JPMorgan Europe High Yield Bond Fund. With major central banks around the world adhering to accommodative monetary policies, the hunt for yield is set to continue. In particular, the European Central Bank has been aggressively loosening monetary policy, by expanding its balance sheet rapidly and sustaining low interest rates.  The ongoing search for income has been a major theme for investors and Europe offers an attractive set of opportunities.

In the equity dividend space, Europe sits in an enviable place among other regions, with better corporate governance, as well as higher dividend yields as compared with other developed markets, such as the US and Japan, says JPMAM. The JPMorgan Europe Strategic Dividend Fund aims to provide income and long term capital growth by investing at least 70% of its non-cash assets in equity securities of companies which are based in, listed on the stock exchange of, or operate principally in Europe and are expected to pay dividends.

“The supportive monetary policy helps lower the financing costs, boost credit demand and keep a lid on the value of the euro – all of which are positive for the European economy,” says Thomas Buckingham, fund manager of JPMorgan Europe Strategic Dividend Fund.  “Historically, high yielding stocks substantially outperform the market and have been a key component of returns.  With the decreasing lending cost and improving economy, we expect dividend to be supported by corporate financial strength and lower volatility.”

Similarly, high yield bonds gain traction in a low rate environment.  European high yield bonds typically offer less risky options as their exposure to energy and other commodities is significantly less than their US counterparts.  They also feature a relatively higher quality distribution, which means lower default rates.  After adjusting for European high yield’s higher average credit quality and shorter weighted-average duration, spreads still offer good value as compared to US high yield bonds.  The JPMorgan Europe High Yield Bond Fund’s investment objective is to achieve a return in excess of European bond markets by investing at least 70% of its non-cash assets in European and non-European below investment grade debt securities, denominated in European currencies.