JPMorgan Asset Management’s (JPMAM) Tony Lanning is backing US equities to drive the early returns of his new Fusion multi-manager portfolios.
The multi-manager has also invested heavily in star names such as Pimco’s Bill Gross, Fidelity’s Ian Spreadbury and Investec’s Alastair Mundy in the five funds.
In his first interview since joining JPMAM in May to run the new products, Mr Lanning said he was using recent falls in US shares to add to his equity holdings in the region.
Mr Lanning said: “The US economy is in rude health. US equities have performed well – we do need earnings growth to come through for companies to move on, but there is no evidence that this won’t happen.”
The Fusion funds’ US exposure varies from 10 per cent in the lowest risk Income fund to 43 per cent in the highest risk Growth Plus fund.
It consists of exchange-traded funds tracking the S&P 500 and MSCI USA indices, and holdings in several JPMAM funds, including Clare Hart’s £1.8bn US Equity Income fund. Mr Lanning has also invested significantly in Dutch asset manager Robeco’s US Large Cap Equities fund.
The overweight are based in US equities forms part of an overall bullish stance in equities, although Mr Lanning said he was still more cautious on Europe and Japan than many of his peers. In both regions the Fusion funds are neutrally positioned compared with the strategic asset allocation set by JPMorgan’s private bank strategists. “I’m very aware that when markets sell off, Europe still sells off more, and there are still some bumps along the road,” Mr Lanning said.
“In Europe we have moved from underweight to neutral. We haven’t gone overweight yet but we have gone more cyclical with the holdings we have.”
He admitted that having a lower weighting towards Japan than many of his peers had been “a bit of a headwind” so far in 2013, but maintained that the Japanese government “still has some work to do”.
Other star names backed by Mr Lanning include Hugh Young’s Aberdeen Asia Pacific fund, which makes up a significant portion of each of the five Fusion funds’ Asian equity exposure; and Liontrust’s Jan Luthman and Stephen Bailey. The duo’s Liontrust Macro Equity Income fund features in three of Mr Lanning’s funds.
In fixed income, Ian Spreadbury’s Fidelity Moneybuilder Income fund and Bill Gross’s giant Pimco Total Return bond fund feature heavily in four of the five portfolios, alongside the JPMorgan Aggregate Bond fund, run by Nick Gartside and Iain Stealey, and Pimco’s UK Corporate Bond fund.
“In fixed income we have a much lower duration – about three years – than most, but we are adding duration a little,” Mr Lanning said.
“It’s clear interest rates are going to rise, but not in the next 12 months – there is a difference between travelling and arriving. Markets should interpret tapering as a good thing.”