Since taking over the JP Morgan Overseas investment trust at a difficult time last year, Jeroen Huysinga has transformed the portfolio. It has reached its goal, and produced top sector results.
In October 2008 Jeroen Huysinga took over the JP Morgan Overseas investment trust, and was tasked with making the fund’s performance more competitive relative to its Global Growth peer group.
It has lived up to its goal since turning over 90% of the portfolio within a month of taking it over from Edward Walker. According to Morningstar, the trust was ranked fourth out of 31 funds in the AIC Global Growth sector over one year to August 31, and second out of 29 over three years.
Huysinga says the performance under the previous manager was fine relative to its benchmark, but the board wanted a vehicle that would deviate more away from the index, the MSCI All Countries index. As a result, since taking over the manager has halved the average the market capitalisation of the portfolio and altered nearly all its positions.
“Taking over the portfolio in October was an interesting time as equity markets were plummeting,” says Huysinga. “However, with hindsight it proved a good time to change the portfolio.”
By the end of the year the fund had virtually no exposure to telecoms or utilities. This is because Huysinga says the stocks in these sectors had become too expensive and had few catalysts to generate value.
“Instead we were overweight in capital markets, in names such as Morgan and Goldman Sachs, as they looked cheap because they had been thrown out with the bath water and were nicely geared to any upturn in the market. This is what happened and as a result the fund has had a very good year,” he says.
Huysinga’s investment approach is based on the offshore JPM Global Focus fund he has managed since 2003. “It is a valuation approach based on the concept of normalised earnings,” he says. “I interact with [JPM’s] 60 regional analysts who are based in our London, New York, Tokyo and Singapore. My skill is then to pick stocks based off of these ideas.”
Indeed, to ensure the fund’s performance relative to the benchmark is based on stock selection rather than currency movements, where possible he hedges back to the benchmark currency. “This isolates all the risks down to the areas we are good at,” he says.
James Brown, a research analyst at Wins Investment Trusts, says Huysinga has had a successful first year.
“Performance before him had been dull for a while – it wasn’t disastrous, but it wasn’t great,” he says. “Now the fund is both consistent and, according to our numbers top of the sector over one year so JPM and investors will be very happy.”
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