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Jpmam dynamic fund range june 13 Jpmam dynamic fund range june 13 Presentation Transcript

  • Perception versus realityJ.P. Morgan Asset ManagementDynamic Fund rangeJune 2013
  • 1European equities have delivered strong returns... there is a difference between the perception and reality of European equity investingPerformance of MSCI EuropeSource: Datastream. Data from 09/03/09 to 31/03/13. Includes gross reinvested dividends, in EUR.100120140160180200220Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13EU tells France, SpainIreland & Greece to cutBudget deficitsIMF agree €110bnbailout for Greece€85bn bailoutfor IrelandESM set upwith €500bn€78bn bailoutfor Portugal2nd Greek bailout€109bn + concernson Spain & Italy1st LTRO in December 20112nd LTRO in February 2012Past performance is no guarantee of future performance.Draghi‘sbumblebee speech114%
  • 20123456789101.4 1.6 1.8 2.0 2.2 2.4 2.6 2.8 3.0The importance of international markets to European revenuesSwedenDenmarkNetherlandsBelgiumFinlandGermany UKSwitzerlandFranceNorwaySpainAustriaItalyPortugalRealequityreturn(annual,%)Real GDP growth (annual, %)Real GDP growth versus real equity returns (1970 – 2011)Source: MSCI, United Nations, J.P. Morgan Asset Management. View slide
  • 3859095100105110115120125130135140Dec 90 Dec 95 Dec 00 Dec 05 Dec 10-6-3036912Dec 90 Dec 00 Dec 10(Left) Note: Latest data August 2012. Source: IMF, J.P. Morgan Asset Management. (Right) Note: Latest data 3Q 2012. Data rebased to 100 at 4Q 1998. Unit labour cost measures the average costof labour per unit of output and is calculated as the ratio of total labour cost to real output. Source: ECB, J.P. Morgan Asset Management.European Structural ImbalancesUnit labour costsRelative to GermanyEurolaunchIrelandGreeceSpainItalyTrade balances with the eurozoneSix month moving average, USD BillionEurolaunchGermanyGreeceSpainItaly View slide
  • 401020304050607026 32 38 44 50 56 62 68 74 80 86 92 98 04 10Equity CorrelationsGlobal large cap stocksCorrelations among stocksCapitalization weighted correlation of top 750 stocks by market capitalization, daily returns, 1926 – 2013. Source: Empirical Research Partners LLC, Standard & Poor’s, J.P. Morgan AssetManagement. Past performance is not an indication of future performance.SovereignDebt CrisisLehmanBankruptcyTech Bust & 9/111987 CrashGreat Depression /World War IIOPEC OilCrisisCuban Missile CrisisMar 2013: 34,5%
  • 5Current valuations point to healthy returnsUKSource: MSCI, SG Cross Asset Research. European Dividend Yield is the Cyclically Adjusted Dividend Yield for MSCI Europe factoring in the 10 year average.As at 31/03/13. Past performance is not a guide to future performance.Europe ex UK-15-551525350.51.01.52.02.53.03.54.04.55.05.580 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12%%YearCyclically adjusted dividend yield(Div 10yr MA, lhs)Index return over next 5yrs (%annualised, rhs)-15-551525350.51.01.52.02.53.03.54.04.55.080 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12%%YearCyclically adjusted dividend yield(Div 10yr MA, lhs)Index return over next 5yrs (%annualised, rhs)
  • 6Fund overview: Dynamic Fund RangePortfolio characteristics Conviction based approach– Number of holdings: 50 + Multi-cap Flexibility– JPMorgan UK Dynamic Fund size £139m– JPMorgan Europe Dynamic ex UK Fund size £86m Unconstrained versus benchmark– JPMorgan UK Dynamic: FTSE All Share Index– JPMorgan Europe Dynamic ex UK: FTSE All WorldDeveloped Europe ex UKManagement teamStock n/aSector + 35%Country n/aJon IngramSource: J.P. Morgan Asset Management. 31/03/2013. The above portfolio characteristics are shown for illustrative purposes only and are subject to change without notice.John Baker
  • 77Strong performance across Dynamic range - Net Excess Returns vs relevant benchmark as at 30/04/13-202466 mnths 1 year 3 years (pa) 5 years (pa) Since Inception (pa)Net Excess Return %-202466 mnths 1 year 3 years (pa) 5 years (pa) Since inception (pa)n/an/aSource J.P.Morgan Asset Management . Returns are net of A share class fees. JPM UK Dynamic Fund vs. FTSE All Share. Inception date Oct 2000. JPM Europe Dynamic ex UK vs. FTSE AllWorld Developed Europe from Oct 2008, prior to this FTSE Europe ex UK. Inception date 30 Sept 2004. JPM Europe Dynamic vs. MSCI Europe. Inception date Dec 2008. JPM EurolandDynamic vs. MSCI EMU Index. Inception date Sept 2011.-202466 mnths 1 year 3 years (pa) 5 years (pa) Since inception (pa)-202466 mnths 1 year 3 years (pa) 5 years (pa) Since inception (pa)UK DynamicEurope Dynamicex UKEurope DynamicEuroland Dynamic
  • 8Valuation Based on PE and other relevantrelative value measures (e.g.P/NAV for real estate companies) Cheap/expensive on absolutebasisMomentum Daily monitoring of earningsannouncements Order book & product pipeline Identifying winners & losersQuality Cash flow statement Balance sheet Return on invested capitalRigorously identifying stocks with specific style characteristicsWhat other factors may influence the stock?External factors (e.g. macro environment) Management changes Corporate activity
  • 9Investment approach benefits from lower market correlations-15-10-5051015-102030405060702000 2001 2002 2003 2003 2004 2005 2006 2006 2007 2008 2009 2009 2010 2011 2012 2012Quarterly excess returnsEquity correlationSource: Empirical Research Partners LLC, Standard & Poor’s, J.P. Morgan Asset Management. 31/03/2013. Past performance is not an indication of future performance. Quarterly excess returns andunderperformance refers to the JPM UK Dynamic Fund (net of fees A – Acc) versus the FTSE All Share Index. Indices do not include fees or operating expenses and are not available for actual investment.
  • 10Why invest in the J.P.Morgan Dynamic fund range? Stable team and process have delivered marketleading performance in previous cycles Process is at its strongest when companyfundamentals re-establish themselves as theprimary driver of markets Fund is unconstrained so able to take advantage ofmanager convictionPre-crisis peer group performanceSource: FE Analytics. Since inception of fund 05/10/04 to 14/11/12 Rebased in pounds sterling. Past performance is not an indication of future performance.
  • 11200300400500600700800900100011001200Apr 12 Jul 12 Oct 12 Jan 13 Apr 13Shareprice234567Apr 12 Jul 12 Oct 12 Jan 13 Apr 13SharepriceIndustry restructuringSource: J.P. Morgan Asset Management, Bloomberg as at 31/03/13The inclusion of the securities mentioned above is not to be interpreted as recommendations to buy or sell. These investment examples are included solely to illustrate the investment process andstrategies which may be utilized by the Fund. Please note that these investments are not necessarily representative of future investments that the Fund will make.easyJetRyanair
  • 12Industry restructuring100120140160180200220240260280300Apr 12 Jul 12 Oct 12 Jan 13 Apr 132468101214Apr 12 Jul 12 Oct 12 Jan 13 Apr 13Source: J.P. Morgan Asset Management, Bloomberg as at 31/03/13The inclusion of the securities mentioned above is not to be interpreted as recommendations to buy or sell. These investment examples are included solely to illustrate the investment process andstrategies which may be utilized by the Fund. Please note that these investments are not necessarily representative of future investments that the Fund will make.Smurfit Kappa DS SmithSharepriceShareprice
  • 13400500600700800900100011001200Apr 12 Jul 12 Oct 12 Jan 13 Apr 13Recovery0.040.060.080.10.120.140.160.18Apr 12 Jul 12 Oct 12 Jan 13 Apr 13Bank of Ireland PersimmonSource: J.P. Morgan Asset Management, Bloomberg as at 31/03/13The inclusion of the securities mentioned above is not to be interpreted as recommendations to buy or sell. These investment examples are included solely to illustrate the investment process andstrategies which may be utilized by the Fund. Please note that these investments are not necessarily representative of future investments that the Fund will make.SharepriceShareprice
  • 14Fund specific examples0100200300400500600700Apr 12 Jul 12 Oct 12 Jan 13 Apr 13SharepriceSource: J.P. Morgan Asset Management, Bloomberg as 31/03/13. Past performance is not an indication of future performance. The information in this case study is intended as an example only andshould not be construed as advice, it may not be suitable for your particular circumstances and if you are unsure of the suitability of any investment you should seek financial advice. The opinions andviews expressed here are those held by the author as at date of this document, which are subject to change and are not to be taken as or construed as investment advice. J.P. Morgan AssetManagement may or may not hold positions on behalf its clients in any or all of the aforementioned securities.24681012141618Apr 12 Jul 12 Oct 12 Jan 13 Apr 13SharepriceAshtead Banca Generali
  • 15Conclusion Current market environment is favourable for unconstrained, conviction based active management Process is at its strongest as macro influences subside and fundamentals return as the key driver of markets Despite continued strong performance, European and UK markets remain cheap Well resourced, experienced track record of outperformanceThe opinions and views expressed here are those held by the author as at the date of the document, which are subject to change and are not to be taken as or construed as investment advice
  • 16Appendix
  • 17Specialist investment teams with an average of 14 years experienceSource: J.P. Morgan Asset Management as at 31 March 2013. There can be no assurances that the professionals currently employed by J P Morgan Asset Management will continue to be employedby J P Morgan Asset Management or that the past performance or success of any such professional serves as an indicator of such professional’s future performance or success.CoreWilliam MeadonStephen Macklow- SmithCallum AbbotJoanna CromptonSarah EmlyAlexander Fitzalan HowardJames IllsleyRichard WebbSmall / Mid CapJim CampbellMartin HudsonGuy AndersonGeorgina BrittainFrancesco ConteEdward GreavesAnthony LynchKatan PatelClient Portfolio ManagementJames GloverLouise Bonzano Charlotte Crisp Ceri Jones Paul Shutes Karsten Stroh Nick WilcoxMichael Barakos (CIO)DynamicMichael BarakosTom BuckinghamIan ButlerBen StapleyKyle WilliamsStyleNicholas HorneJudy BromfieldPhilippa CloughJames FordRekha HalaiChris LlewelynJohn O’BrienDavid AllenSteve SatchellJon IngramJohn BakerBlake CrawfordAnis Lahlou-AbidInvestment Research &Portfolio Implementation
  • 18J.P. Morgan Asset ManagementEuropean and UK Product RangeSource: J.P. Morgan Asset Management as at 31 March 2013. The targets and aims provided above are the Investment Manager’s targets and aims only and are not necessarily part of the Fund’sinvestment objectives and policies as stated in the prospectus. There is no guarantee that these will be achieved.ReturnRiskTypical Tracking ErrorPerformanceTargetUK EquityEurope Dynamic(ex-UK)UK DynamicUK Higher IncomeUK ActiveIndex PlusUK Strategic EquityIncomeUK Managed EquityUK Equity & Bnd Inc.Europe SmallerCompaniesUK StrategicGrowthInvestment TrustsEuropeFundClaverhouseJPM ITEuropean IncomeJPM ITEuropean GrowthJPM ITElect ManagedIncome JPM IT(UK) Smaller Co.’sJPM ITMid CapJPM ITMercantileJPM ITIncome & GrowthJPM ITEuropean Smaller CosJPM ITIncome & CapitalJPM ITOEICUK SmallerCompanies
  • 19Long term competitor comparison
  • 20JPM UK Dynamic FundInvestment policy and risk profile Investment policy– To maximise long-term capital growth by investing primarily in UK equities. Risk profile– The value of your investment may fall as well as rise and you may get back less than you originally invested.– The value of equity and equity-linked securities may fluctuate in response to the performance of individual companies andgeneral market conditions.– This Fund is aggressively managed, which may result in higher volatility of the Funds performance and bigger differencesbetween the performance of the Fund and its benchmark.– The single market in which the Fund primarily invests, in this case the UK, may be subject to particular political and economicrisks and, as a result, the Fund may be more volatile than more broadly diversified funds.Please refer to the Funds prospectus or Key Investor Information Document (KIID) for more information relating to the Fund.
  • 21J.P. Morgan Asset ManagementFOR PROFESSIONAL INVESTORS ONLY. NOT FOR RETAIL USE OR DISTRIBUTIONThis material is not an offer or solicitation for the purchase or sale of any financial instrument in any jurisdiction, nor is it a commitment by JPMorgan Asset Management or any of its subsidiaries (collectively “JPMAM”) to enterinto any transaction referenced herein. All information provided by JPMAM herein is indicative, is based on certain assumptions and current market conditions and is subject to change without notice. Accordingly, no relianceshould be placed on the information herein. In deciding whether to enter into any transaction or strategy referenced herein, the recipient should rely solely on the final documentation which will contain the definitive terms andconditions relating to any referenced transaction or strategy.These materials have been provided for illustrative purposes only and should not be relied upon by you in evaluating the merits of investing in any securities or strategies mentioned herein. Past performance is not a guide to thefuture.Any forecasts, opinions and statements of financial market trends expressed are JPMAM’s own at the date of this document and may be subject to change without notice. Any research in this document has been obtained andmay have been acted upon by JPMAM for its own purpose. The results of such research are being made available as additional information only and do not constitute investment advice. They do not reflect the views of JPMorganChase Group. 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 performanceand yield may not be a reliable guide to future performance. Changes in exchange rates may have an adverse effect on the value, price or income of the product or underlying overseas investments. Investments in smallercompanies may involve a higher degree of risk as they are usually more sensitive to market movements. Investments in emerging markets may be more volatile than other markets and the risk to your to your capital is thereforegreater. Also, the economic and political situations may be more volatile than in established economies and these may adversely influence the value of investments made.Corporate, High Yield, Non-Investment Grade and Unrated Bonds: Bond prices can fluctuate significantly depending not only on the global economic and interest rate conditions but also on the general credit market environmentand the creditworthiness of the issuer. Bonds with a lower credit rating may have a higher risk of defaulting which may in turn have an adverse effect on the performance of Funds which invest in them. High yield bonds are lower-rated, non-investment grade or unrated securities and will usually offer higher yields to compensate for the reduced creditworthiness or increased risk of default that these securities carry.JPMAM makes no representation or warranty regarding the accuracy or completeness of the information herein. JPMAM is not an advisor to any person who receives information on any referenced transaction.The recipient must make an independent assessment of an legal, credit, tax, regulatory and accounting issues and determine with its own professional advisors any suitability or appropriateness implications of any transactionreferenced herein in the context of its particular circumstances. JPMAM assumes no responsibility or liability whatsoever to any person in respect of such matters. JPMAM, or any connected or associated person, may hold long orshort positions or derivative interest in or act as market maker in the financial instruments of any issuer referred to herein or act as underwriter, distributor, advisor or lender to any such issuer. JPMAM may conduct tradingactivities, including hedging, in connection with any transaction referenced herein which may have an adverse impact on the recipient.This material is specific to the recipient and must not be distributed to any other person or replicated in any form without the prior written consent of JPMAM. Any investment or service to which this material may relate will not bemade available to Retail Clients. The recipient should execute transactions through an authorised entity in their home jurisdiction unless governing law otherwise permits.Telephone lines are recorded to ensure compliance with our legal and regulatory obligations and internal policies.Issued by JPMorgan Asset Management (UK) Limited, Registered in England No. 01161446. Registered Address: 25 Bank St, Canary Wharf, London E14 5JP. JPMorgan Asset Management (UK) Limited is Authorised andRegulated by the Financial Services Authority (FSA). Approved for use in the United Kingdom to Professional Clients (as such term is defined by the FSA rules).Issued to Professional Clients in other Jurisdictions by JPMorgan Asset Management (Europe) Société a responsabilité limitée, European Bank & Business Centre, 6 route de Trèves, L-2633 Senningerberg, Grand Duchy ofLuxembourg, R.C.S. Luxembourg B27900, corporate capital EUR 10.000.000.PG-13-2351 03/06/13