JP Morgan’s Lanning on building portfolios with a difference

JPMorgan Asset Management lead multi-manager Tony Lanning on the key motivations for joining the company and building portfolios with a difference

Lanning Tony JP MorganFor Tony Lanning, among the primary motivators for upping sticks and taking on the multi-manager reins at JP Morgan Asset Management were the depth of resources and analytical bells and whistles on offer at the firm.

As the lead manager on JPMorgan’s Fusion suite of portfolios – the firm’s fledgling range of fund-of-funds, he is responsible for some $55m in assets under management across five risk mapped vehicles spanning the investment spectrum: Income, Conservative, Balanced, Growth and Growth Plus.

Lanning points out the Fusion range – which launched in March 2013 – sits within the corporation’s “global access” division – a team of discretionary fund managers who look after some $90bn, for wealthy clients through JPMorgan’s Private Bank.

“I joined JPMorgan because of the resources offered at the private bank. This is a key differentiator for these funds versus their competitors. I have 43 specialist fund analysts and have access to the global asset allocation framework of the private bank,” he says.

Lanning’s career asset management career spans two- plus decades. Prior to joining the ranks of JPMorgan, he worked at Henderson Global Investors, where he was director of its multi-manager business. He also headed the multi-manager team at Gartmore before Henderson acquired it and previously held roles at the private bank of Arbuthnot, Latham & Co and Origen Financial Services.

Pointing to his new role he says merely replicating the processes he became used at his previous Henderson role would have been insufficient a motivator to have made him change his role.

Lanning adds: “Risk management is your key starting point in protecting client’s money – that is why our funds are highly diversified.

“We are building portfolios that we feel are very different to everyone else.”

After the US represented his biggest weighting in 2013, it now plays second place to Japan. Despite its economic woes, the world’s third largest economy represents “the highest conviction position” across all of his portfolios.

Even when the land of the rising sun saw its market fall off a cliff during the first part of 2014, Lanning viewed the volatility as a buying opportunity. He says: “Japan is not a two-to-three month story, more a three business cycle event. There really is change going on in Japan for the first time in a very long time.”

In fact even though Japan has fallen back into technical recession, it does not materially affect his positive outlook for the equity market.

He says: “The slight pullback in the market on the news has cleared some overbought levels and allowed a more attractive entry level to increase equity exposure further. A postponement of a further hike in the consumption tax until April 2017 is beneficial to short term growth and we are fairly confident the chances of Prime Minister Abe losing a snap election this December are minimal given the LDP’s significant current majority and still elevated popularity ratings.”

Lanning’s bias towards Japan does not mean however he is not upbeat on the prospects for the world’s largest economy. Lanning says: “The US economy is doing very well. I think it can continue to perform even if growth in other parts of the world is sluggish. We believe it can grow at a rate of 3 per cent.”

While he currently has a preference for large cap US stocks Lanning acknowledges there is a risk that the US economy continues to do well – and the market becomes “priced to perfection”. He says: “The S&P 500 has already hit new highs but there is no reason it cannot go further from here.”

Even the stubborn strength of the greenback has not put the fund manager off, given he says that it is doing so for “the right reasons”.

Given the more closed nature of the US economy Lanning expects that Uncle Sam will be the first to kick-start monetary tightening, raising interest rates before the Bank of England. This is because the UK has tighter connections to the more troubled Europe, where things he says are a “bit of a mess and politically complicated”.

Despite the turmoil engulfing Europe, which Lanning admits is probably the biggest global macro risk to market right now, his charge of funds have a “broadly neutral allocation” as he says it is not all bad news.

He adds: “I don’t think growth will collapse but it is running the risk of stagnating. There are still very strong companies in Europe it is just that managers have to be very selective. But there is a large opportunity for stockpickers to make money.”