Multi-managerJun 9 2014

Advertorial: JPM’s fresh approach to MM

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by

When Tony Lanning joined JPMorgan just over a year ago he was tasked with establishing its retail multi-manager proposition.

Using the expertise he had built up during his tenure in the industry, he set out determined to create a range of funds that offered investors something different from what was already available, while also providing advisers with an appealing and accessible investment solution for their clients. The result was the Fusion range, which, 14 months on is proving to be a popular option for those looking for a multi-asset, multi-manager, risk-targeted range that offers superior risk-adjusted returns.

“When I made the move to JPMorgan it was with the understanding that there was no point coming up with a ‘me too’ range of multi-manager funds. I thought long and hard about how to differentiate it and the key difference is it sits in JPMorgan Private Bank rather than the asset management division,” he explains. “The private bank was created to offer ultra-high-net-worth individuals a way to access the bank’s best thinking. I thought it would be really interesting to offer that same best thinking to retail customers. It means we can start with a blank sheet of paper and consider where the best opportunities are. That means that, from time to time, our asset allocation can look very different to that of our peers. Our manager selection is also markedly different.

“Nick Roberts and I have worked together previously at Gartmore and have access to a dedicated team of 40 people. Their job is solely to analyse funds for the private bank’s platform. With $1.5trn of assets on the platform it is safe to say it gives us unbelievable access to managers.”

Mr Lanning is part of the bank’s Global Access team, which consists of 50 investment professionals. In addition, 15 people make up the strategy team which sets up the framework for all the portfolios in Global Access, including the Fusion funds. They create a strategic asset allocation for each asset class and geographical region, which Mr Lanning can then take a directional view on, deciding whether he wants to take an overweight, underweight or neutral tactical position. If he is positive on a sector, he can go up to 15 per cent overweight, while if he is negative, he can underweight by up to 15 per cent.

“All of this is done in-house using the team’s own processes and strategies,” Mr Lanning says. “When we move on to construct the portfolios, we then align each fund with a Distribution Technology (DT) risk rating. However, unlike some other multi-managers, we do not use the DT asset allocation, but simply are disciplined in using our own asset allocation to replicate the same volatility as within the DT risk bands.

“The whole reason for launching Fusion was to provide a solution for IFAs, so we are really strict in making sure we run the funds within those volatility parameters, but the asset allocation that generates that comes completely from JPMorgan. To date, advisers have responded really positively to the range, no doubt helped by the fact that, although our asset allocation can look very different to our peers, we have generated some of the best risk-adjusted returns in the sector.”

Mr Lanning acknowledges that the resources he has available to him at JPMorgan have played no small part in the funds’ stellar performance. Not least, the 40-strong manager selection team gives him a real competitive advantage, with each investment specialist tasked solely with finding the best managers from around the globe to complement the in-house asset allocation framework.

“If you speak to any multi-manager, they will analyse the people, their processes, philosophy and performance. They all offer the same thing, JPMorgan included. However, the difference is, we have 40 specialists dedicated to manager selection around the world. We have the capacity to consider funds from their qualitative features first, rather than just running quant screens based on past performance. In multi-manager you often find managers you really like, where everything stacks up in terms of how the fund is run, but the performance may look terrible. There may, however, be a really good reason for that. Perhaps it is a value manager operating in a growth market, for example. If you choose managers just by crunching the number, you would miss out on that manager.

“Our way of doing things is certainly more sophisticated but, crucially, it is only possible because of the resources we have. It means we have been able to create a proposition that looks and feels different, where, compared with the five most popular multi-manager funds we only have one holding in common. The reason I came to JPMorgan is the exact reason I would urge investors to consider Fusion: because it offers a different and better approach to multi-manager.”