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.”
Three funds Tony Lanning is backing in the Fusion range
Neuberger Berman High Yield Bond
The top holding in the Fusion Balanced fund features in all five of Mr Lanning’s portfolios – a sign of the product’s increasing popularity among multi-managers and discretionary managers. The $9.9bn (£6.3bn) Irish-domiciled fund is run by Ann Benjamin, Thomas O’Reilly and Russ Covode and has gained 26.7 per cent in three years, according to FE Analytics, although this was less than its BoAML US High Yield Master II index benchmark which gained 30.9 per cent.
Pimco Total Return
Fixed income guru and Pimco founder Bill Gross runs this $27.9bn fund, which is invested largely in US government and government-related bonds. Mr Gross is renowned for making bold calls, not all of which pay off – in early 2011 he sold out of US treasuries and even took a ‘short’ position in the asset class, before reversing this when the bet went against him. In three years the Total Return Bond fund has gained 7 per cent, marginally underperforming its Barclays US Aggregate index benchmark.
Aberforth UK Small Companies
This £96.7m fund has marginally outperformed the Numis Smaller Companies index in the three years to August 28, with a 77.2 per cent return. It is Mr Lanning’s only UK small-cap exposure and features in all five funds. Aberforth Partners’ six-strong investment team runs the fund with a value bias, focusing on intrinsically undervalued companies in the Numis index. As at the end of July, the managers had established an overweight position in industrial and technology companies.
Adviser Views: Can the range succeed?
Aj Somal, chartered financial planner, Aurora Financial Planning
Multi-manager is becoming a crowded market, and you could argue JPMorgan is coming in rather late. It will be interesting to see how they compare with the other groups already in this space. JPMorgan has a well-established brand name and a good reputation in the adviser space, so it will be worth considering.
Alistair Cunningham, director, Wingate Financial Planning
It’s very rare we buy multi-manager funds. It is a massively crowded space – there are literally thousands. For fund houses it might be quite difficult as they don’t want to miss out on that opportunity, but it might just be another ‘me too’ fund.
Kevin Morgan, managing director, Consilium Financial Planning
The market is awash with multi-manager funds. They all have their bells and whistles but to me it boils down to cost. It’s not the only deciding factor but it is very important. We like F&C and Jupiter Merlin, and that is very stiff competition. They’re not cheap but consistently excellent.
