HEAD-TO-HEAD: JP Morgan versus Jupiter

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Investment approach

Both the JP Morgan and the Jupiter funds invest in European equities including the UK.

However, both have completely different processes, with one product following a quantitative process and the other having a more fundamental approach, according to Kandlur.

The JP Morgan fund is a quantitative fund and combines three factors in its model: momentum, value and quality.

“What the team does is they look for stocks that ideally have attractive value, higher quality and positive momentum,” Kandlur said, noting that the momentum factor has been more of a key driver of returns over the last few years.

The fund aims to weather any market environment, so its style tilt may change frequently, according to Kandlur.

“It is actually true to its name that it is ‘dynamic’. It has a high turnover strategy and the average stock holding period is four-to-six months.”

Kandlur added that the fund also does not have strict constrains in terms of country and sector allocation versus its benchmark, which is the MSCI Europe Index.

Sector exposure, for example, cannot be more than 35% of the portfolio, which Kandlur believes is a loose constraint. However, despite the flexibility, the fund does not deviate much from the benchmark.

“It tends to be more benchmark-aware, so it won’t deviate by a massive amount,” she said.

Turning to the Jupiter fund, Kandlur said that the fund manager has a more fundamental approach to investing.

“The fund manager is more fundamental in his approach, which means he is doing fundamental analysis and is actively doing company meetings. [By comparison], JP Morgan has a quant-driven process, so they are more focused on refining their model rather than meeting with management.”

The Jupiter fund also has a growth bias, with a focus on high quality global European companies.

“The fund manager likes companies that have good balance sheets, strong brands and are resilient despite the economy. The manager will not be investing in cyclical sectors like energy or materials, or anything that is tied to the domestic economy,” she said.

The Jupiter fund is highly concentrated with 35-45 names. The top 10 holdings comprise nearly 60% of the portfolio.

Unlike the JP Morgan fund, the Jupiter product holds stocks for a long period – up to five years, according to Kandlur.

“The real focus here is stock selection,” she said, adding that the Jupiter fund deviates more from its benchmark, the FTSE World Europe Index, when compared to the JP Morgan fund.

Country allocation

Source: Fund factsheets

Sector allocation

Source: Fund factsheets

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