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JP Morgan playing the team game

Chris Salih profiles the fund firm’s future after losing Ajay Ghambir.

With a heritage that dates back over two centuries, JP Morgan is a global firm that can match its rivals for history.

The fund firm employs more than 650 investment professionals and is a major player in three continents, with 200 strategies across a range of core and alternative asset classes.

In the UK, the group offers products covering almost all the major sectors. However, some believe it has failed to break into the top echelon of fund firms in the UK.

JP Morgan sits outside the top 20 players domestically. It has £7.6bn of funds under management, placing it 21st, according to the Investment Management Association statistics, well behind the likes of Fidelity, Invesco Perpetual and Jupiter.

What are the firm’s strengths and what is preventing it from becoming one of the major household names in the UK market?

BestInvest head of communications Justin Modray says the firm has steered clear of pushing individual managers as stars and opts to promote talent from within.

He says: “You seldom see JP Morgan appoint someone from outside of the business, with a team-based approach at the centre of its product offering. Its TMV model – trade momentum and value – is a strong screening process that helps to uncover behavioural finance theories.”

“The US fund has done well under the management of Rob Weller and Silvio Tarca but the two funds that stand out are the natural resources and UK smaller companies funds.”

The £299m UK small companies fund, managed by Georgina Brittain and Mark Davids, is ranked sixth out of 48 in the smaller companies sector over three years while the £810m natural resources fund, run by Ian Henderson, has been a top performer in recent years benefiting from the commodity boom.

Modray says: “Henderson has been the shining star for JP Morgan as the commodities’ sector has soared, going toe to toe with Merrill Lynch’s Graham Birch.”

One area where the company has struggled is in establishing its UK equity funds as must-buy products. Only two of its 11 funds have recorded top-quartile performance over three years.

Hargreaves Lansdown senior adviser Ben Yearsley says: “To be part of the top 10 fund managers, you need to have a top quality UK offering that can compete with anyone. I am not sure that JP Morgan has that across the board.”

He feels the firm needs to work on the equity income range. He says: “The constant demand for income makes these products – and a successful one – a necessity.”

JP Morgan has two equity income vehicles in the shape of premier equity income and UK equity income funds, both of which are fourth quartile in the IMA UK equity income sector.

It has suffered its fair share of manager losses, most recently when the European high-alpha head Ajay Ghambir left after a decade at the company to run a hedge fund for MPC Investors.

He will be joining former JPM colleagues, such as Giles Geldard and Lee Manzi, who joined MPC last year.

Ghambir was the innovator behind the dynamic mutual fund range and was lead manager on the firm’s UK dynamic, European, European dynamic and Europe dynamic long-short funds. He has been replaced as team head by Jonathan Ingram.

Chelsea Financial Services managing director Darius McDermott says the firm will overcome the departure of Ghambir and its team-based approach has helped in the past and will do so again.

He says: “The loss of Ghambir is massive but the group has always adhered to the team-based approach and the appointment of Jonathan Ingram is an indicator that it does not look like that is about to change. JPM has lost managers on the UK side and has continued to perform before, so we have kept it on our buy list for now.”

McDermott believes JPM has been forcing itself back into the mainstream arena, having been well known in the specialist market for a long time.

He says: “If you look at what has traditionally done well for the firm, it has been the high-alpha mandates, natural resources and financial vehicles, while the investment trust offering is also strong. But the more recent success of the UK and European dynamic funds has shown the group has been moving into the mainstream.”

Modray believes JPM should stay true to the specialist offering as it differentiates it from many groups in a similar position.

He says: “It is good at what it does, which is having a consistent offering across the board, with a specialist option as icing on the cake. Whether it qualifies as a big boy, such as Fidelity, or a focused boutique, such as Artemis, remains to be seen. Maybe in the next couple of years we will find out.”


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