At the JP Morgan fund, a recent change in the management team has resulted in a shift in focus. In the first half of 2015, the fund was co-managed by Victor Lee and Aisa Ogoshi. Lee left the company after the second quarter of 2015, and the management team was restructured. The fund is now co-managed by Ogoshi, Robert Lloyd and Mark Davids.
“Victor Lee used to maintain an underweight position in Japanese equities because he believed that there are better opportunities. But the new team appears to be more flexible, especially in when it comes to Japanese equities. At this point, the JP Morgan team is actually increasing its Japanese exposure,” Ng said.
According to data provided by FE Analytics, roughly 40% of the JP Morgan fund is invested in Japan.
When it comes to stock selection, Ng noted that the JP Morgan team follows an in-house guideline. The team seeks out stocks that fall into one of its three categories: premium, quality and trading.
Premium stocks, from the firm’s perspective, are large-cap stocks. They are usually market leaders and they can consistently outperform the market. Ng noted that there are very few companies that meet these criteria fully.
Trading stocks are selections that come about due to business cycles and events, and these are holdings that tend to be rotated out within one-to-three years. Quality stocks have characteristics that sit between premium and trading stocks.
Ng said that JP Morgan tries to maintain 20% of its holdings in premium stocks and 20% in trading stocks. Quality stocks make up the bulk of the portfolio.
The team holds regular meetings with country managers who will provide input and analysis that helps the manager shape the portfolio. The fund usually maintains around 100 holdings.
