HEAD-TO-HEAD: JP Morgan vs Standard Life Investments

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Performance

Since inception, in terms of annualised returns, both funds beat their annual targets.

Annualised fund returns

Source: Morningstar

Since its launch in 2013, the JP Morgan fund has returned 8.3% annually, exceeding its target of cash plus 7%. Despite its cumulative performance as noted in the chart above, the SLI fund since inception in 2012 has beat its Libor +5% annual target with an annualised return of 5.5%.

At the end of May 2018, both funds were generating a 1.3% yield.

Goldsmith said the managers allocate to the fund to adapt to market conditions. “It is difficult to say whether they are going to outperform in a particular phase of the market cycle. What the funds are trying to do is put together a portfolio that make those [target] returns in whatever the market conditions are,” he said.

“For instance, in 2015, when equities were largely falling globally, there were mainly government bond and currency allocations in the JP Morgan portfolio, which worked well for them. But the portfolio today is different, with the fixed income position near zero,” he noted.

The SLI fund has struggled during recent years like many other funds in the category. But Goldsmith does not have major concerns about the returns. “The firm has been running this strategy for years. It has delivered a consistent allocation process.

“Although the returns do not look so good relative to their target, the team have had periods in the past when they made the approach work.”

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