JP Morgan Asset Management is part of JP Morgan Chase, which provides retail and investment banking. JPMAM runs £780 billion globally, of which £7.2 billion is in the firm’s British-domiciled Oeic.
While difficult markets have forced some firms to postpone or scrap fund launches, JP Morgan Asset Management (JPMAM) has continued its policy of launching products throughout the cycle.
Jasper Berens, the head of UK retail sales at JPMAM, says the policy has served it well but is starting to come to an end. “When I took over the product range four years ago there had only been one fund launch in the last five years. We’ve undertaken a pretty significant launch programme – I can see far fewer gaps.
“Has it been successful? Broadly, yes.”
The Global Consumer Trends fund, for example, was launched in the teeth of a consumer downturn, but Berens says the fund will be a success in due course and that if one is taking a long-term view it does not matter when products are launched.
There have been exceptions. “The Behavioural Finance Japan fund was not as successful as we’d have liked,” says Berens. “It launched when Japan was going through a very difficult period, and in the end was just not viable. We’ve got a very similar fund in the Luxembourg Sicav which we can market into discretionary managers, so we shut [Behavioural Finance Japan] down earlier in the summer.”
The JPM Multi-Asset Income fund was launched in July and can invest in any asset class that delivers income. Berens says this product could tap into investors moving out of corporate bonds.
For more intuitive asset allocators, he says, there is the JPM Strategic Bond fund. This best ideas global bond fund, which was launched in May and is managed by Bob Michele, JPMAM’s global chief investment officer of fixed income, is just one of a raft of fixed-income launches since Michele joined the firm in September 2008.
“A year ago the biggest gap in our business was fixed income,” says Berens. “We didn’t have a decent fixed-income capability.
“We have swept out a lot of the old guard, who had made some pretty disastrous mistakes. Bob also brought in Lisa Coleman and Stephen Lear from Schroders. On the product side we made some changes to the Luxembourg range. Effectively what that was doing was starting again.
“Don’t expect to see huge inflows over this part of the cycle, but Bob has a good following of investors. Over the next cycle, the next time fixed income becomes big, JP Morgan will be mentioned in the same rarefied atmosphere as M&G and Invesco Perpetual.”
JPMAM is still weak in British corporate bonds and is aiming to hire a significant name in that area. Aside from that, the biggest gap in the range, says Berens, is a Ucits III long/short fund, after which, product development is likely to slow down and some launches will be consolidated.
Aidan Kearney, co-head of multi-manager at Aberdeen Asset Management, has held the JPM US 130/30 fund for a while, describing it as very solid. He has a high regard for the firm and a senior management who know what is going on.
“That sets the tone of the operation,” he says. “At the fund management level they are very structured. There isn’t anything they don’t cover.
“You might have thought that with them having such a large offering we’d hold more, but the reason for highlighting it is that it’s not a negative; it’s just that there are opportunities elsewhere.”
Berens’s ambition is to make JPMAM the biggest retail fund manager in Britain. “Over the course of a couple of months we looked at how we are going to be the number one retail player,” he says. “Where we were very weak was the retail market. We also did some quite painful research with the IFA market which revealed that many didn’t know anything about us.”
One positive that came out of the research, though, was that advisers did not perceive the firm as carrying any baggage.
The research echoes the view of James Davies, an investment research manager at Chartwell, who says that while the firm certainly has a lot of product offerings, he always thought they were a little standoffish and never really embraced the personal nature of relationships with advisers.
“They could also do with making their managers a little more accessible, although they couldn’t be accused of pushing star managers to the fore,” adds Davies.
“We said we can either spend £20m a year on advertising like New Star,” says Berens, “or we can understand we are a truly global organisation. So what are our Asian, American, European and private bank businesses doing to try to be number one? At the same time we saw a regulator who was very clearly going to make some changes to distribution. We said to ourselves: What do we need to do to help advisers become more sophisticated?”
It was out of this that the JPM Academy was created to work with the adviser community.
“We devised about 30 different training modules,” says Berens. “We looked at what was happening through this market cycle and what the FSA was saying about the Retail Distribution Review (RDR). Some advisers may decide to sell their business as a result so we released a paper that helped IFAs to understand the value of their business. It got 10,000 downloads.
“We then created the Academy, with training tools and presentations. We want to build a relationship with people. We want advisers to tell their clients to choose JP Morgan. The execution of that is an incredible amount of hard work, but our brand awareness has risen pretty dramatically.”
The firm has also been helped by appearing on the front pages following its bail-out of Bear Stearns and Washington Mutual. “By being strong, our brand has become much more well known as a global brand.”
With its extensive product range, Berens says, JPMAM is genuinely trying to be all things to all people.
“It’s hard but it is actually possible. We allow fund managers to be strong, we have a global franchise and we have the capability to take our product range out to clients. Active fund management is going to go through a boom time.”
Chartwell uses the Cautious Total Return fund as a core holding in its portfolios, and in the past has held the Natural Resources fund.
“We’ve also looked at Global Equity Income,” says Davies. “Those types of funds [JPMAM] should be strong in. Their move towards globally-based asset allocation rather than being too UK-centric should benefit them.”
Assuming that JPMAM achieves its ambition to be top dog in the British retail market, the next target will be to stay there.
“When we get to number one, we need to keep listening and keep creating ways for clients to help them in their business,” says Berens. “As we get closer to number one we will need to build up our sales team, and obviously it depends on performance of our products. We need to try and be good in everything, but with our product range we should always be good at something through the cycle.”
One planned change is the introduction of performance fees, although Berens says one of the stumbling blocks is whether they are applicable to relative products. “[The fees] may just have to be on total return products. I am currently exploring it with my competitors via a working party.”