HEAD-TO-HEAD: Capital Group versus JP Morgan

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Manager review

“The Capital Group’s management team is characterised by deep experience, long tenure and low turnover,” said Claus.

The managers are industry veterans with an average of 27 years’ professional experience and 22 years’ tenure at Capital Group.

Besides managing his own sleeve, Flynn holds the role of principal investment officer, which means he provides oversight and tracks results and risk on the strategy level. He is also a member of Capital’s investment committee, which decides about changes in the underlying strategies. The other balanced sleeves are run by Hilda Applbaum, Tomonori Tani, and Anirudh Samsi.

The sleeves within an asset class are equally weighted, with the exception of new managers, who usually start with a smaller share that grows over time, according to Claus.

“The managers are supported by Capital Group’s large and experienced research team, a portfolio strategy group, and an investment committee that oversees performance and decides on the underlying strategies in the fund,” she said.

In contrast to the stability at Capital, “staff turnover levels at the JP Morgan fund in recent years has become worrying,” said Claus.

Thirteen JP Morgan teams run the fund’s 14 sleeves, and the strategy’s sleeve managers are turning over more frequently, eroding its competitive advantage, according to Claus.

Five of the strategy’s managers have left their respective sleeves in the past two years, and since 2016, the global equity sleeve has had three lead managers.

“Often these managers are running high-conviction, concentrated sleeves that may be difficult to replicate, and all but one of these strategies remain in the portfolio. JP Morgan’s equity analyst bench is responsible for security selection and provides some continuity.

“However, the portfolio managers are tasked with sizing the positions and making sector bets, so their loss is felt.”

“The continued presence of managers Schoenhaut and Bernbaum is reassuring,” Claus added.

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