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JPMorgan aims for total return balance

JPMorgan Asset Management has brought out the JPM balanced total return fund, an Oeic which takes advantage of the greater flexibility allowed under Ucits III.

JPMorgan launched this fund to complement the existing JPM cautious total return fund, which was launched in July 2005.

The idea behind total return is as a contrast to traditional funds that aim for relative returns are linked to performance-related benchmarks. that can lose money even if they outperform the benchmark. Total return funds aims to outperform a cash benchmark, in this case the 1 month Libor (sterling), by 5 per cent, after the deduction of the 1.5 per cent annual management charge.

To achieve this objective, the fund takes a multi-asset approach, investing in equities when equity markets look set to perform well, then switching into cash and cash equivalents, gilts and bonds when a decline in the equity market is expected.

At its most aggressive, up to 80 per cent can go into equities while at its most defensive, up to 90 per cent can go into bonds and cash. This means it can participate more fully in equity market rallies than the cautious total return fund.

The fund will be managed by chief investment officer and head of global multi-asset Neill Nuttall, with portfolio manager Talib Shieikh. They also run the JPMorgan cautious total return fund.

With the new fund they will take a best ideas approach to stock selection which starts with an analysis of top-down economic views to identify the asset classes, sectors, themes and regions that are likely to perform well. A bottom up approach is then applied, using in-house research and ideas.

This fund’s use of mixed asset classes and a cash benchmark may help to generate positive returns in real terms, but this will depend on the managers’ asset allocation skills as well as individual stock selection. The fund may also be more volatile than the cautious total return fund because it has the ability to hold a bigger proportion of equities.


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