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JPMorgan applies alpha plus style to emerging markets

JPMorgan Asset Management has established the emerging markets alpha plus fund, a Luxemburg-domiciled Sicav that invests in a concentrated portfolio of 25-50 emerging market companies.

As the fund is part of JPMorgan’s alpha plus range, it will be managed to generate the maximum level of growth. Stock selection will be based on manager CJ Morrell’s interpretation of the best ideas coming from the research team. Morell will have a high level of discretion in the stock selection process, which means the fund will not be bound by any specific benchmark weightings.

Morell will also have access to options, index swaps and index futures to synthetically short markets. At least 67 per cent of the fund’s total assets will be invested in equity and equity linked securities of companies that are registered in emerging market countries, or that derive the majority of their income from emerging market countries, even if listed elsewhere. Despite the fund’s denomination in dollars, it can invest in assets denominated in any currency and currency exposure may be hedged.

Emerging markets recently suffered as a result of the correction in equity markets and some investors will have pulled out of these markets. However, lower valuations could represent good buying opportunities for this fund because the reasons for investing in emerging markets over the long-term have not been affected.

As an aggressively managed equity fund providing concentrated exposure to emerging markets, this would be suitable to investors at the higher end of the risk spectrum as emerging markets stocks can be highly volatile, particularly where exposure is concentrated. Emerging markets may also be less liquid and less transparent than developed markets.

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