Investments  

JPMAM process changes boost equity funds’ performance

JPMorgan Asset Management’s UK funds head Jasper Berens has hailed a turnaround in its behavioural finance equity range a year after the group revamped the process behind the products.

The group has two European and 10 UK equity funds which use a behavioural finance process for stock selection.

Investment Adviser revealed the group had added a ‘quality’ metric in the second quarter of last year, alongside its ‘value’ and ‘momentum’ screens, to help managers better deal with top-down macroeconomic concerns such as the eurozone crisis and slowing global growth.

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Mr Berens said the review had prompted a turnaround in performance.

“The models we have done suggest it is unquestionably due to these changes, and a bit of luck,” Mr Berens said, adding that JPMorgan’s UK equity range was now where the company wanted it to be.

Data from FE Analytics shows that just three of JPMorgan’s behavioural finance funds with a five-year track record to July 25 have produced top or second-quartile returns in their IMA sectors.

However, looking at the one-year term, nine out of the 12 funds using the methodology have now produced top or second-quartile returns relative to their peers.

Mr Berens said the £148.4m UK Dynamic fund, one of the products which uses the behavioural finance process, was one he was particularly pleased with.

The fund has delivered a 42.3 per cent return in the past year, compared with a 26.6 per cent rise for the FTSE All-Share index, according to FE Analytics.

Mr Berens said the boost in performance on its behavioural finance range had helped put its UK equity-focused funds, including income-based products, in a better position to compete with peers.

“Not many people know us for our UK equity range,” he said.

“People have been relying on the same managers for far too long. Advisers use the same people over and over again for UK income. They should be braver and look at funds that are performing well.”

The improved performance on the behavioural finance funds will be a boost to the group after its wider range has faced performance headwinds.

In February last year, Investment Adviser revealed that just two of the 30 UK-based fund offerings had beaten their sector averages in five years.

But the group has recently taken steps to address this by culling sub-scale and poor performing funds in a bid to make its range fit for purpose, or, in the case of the Cautious Total Return fund, revamping its investment objective.

The company has also seen itself enter the Large Investment Group category of the Investment Adviser 100 Club.

Elsewhere, Mr Berens added he thought the group was a “natural home” for investors seeking to invest in emerging markets, particularly because of moves by rival groups First State and Aberdeen to discourage new investment.

Mergers, closures and changes: JPMorgan hits the overhaul button

The revamping of JPMorgan Asset Management’s behavioural finance process appears to have helped the short-term returns of the range and shows the group has taken action to address underperformance.