JPM Europe Dynamic: European fund boss confident he can bag 10% annual returns for next five years
Radical: JPM's Jon Ingram does not visit firms he buys into
Many active fund managers spend most of their time meeting the management of firms whose shares they hold or are considering buying.
The idea is that they will get an insight others might not and steal a march on competitors when it comes to generating returns for investors.
Such an approach is anathema to Jon Ingram, one of the three managers responsible for running the JPM Europe Dynamic Excluding UK fund. Meeting firms is simply not something he does.
Ingram is part of a 45-strong investment team at JP Morgan’s London office using ‘behavioural finance’ – the art and science of understanding why markets and investors behave the way they do – to extract a return from £15billion of European equities.
It is a systematic, unemotional process that is increasingly popular with leading fund groups. So far the approach is working at JPM Europe Dynamic, where it is rigorously applied.
In the past five years, the fund has outperformed most of its European peers. And despite economic mayhem on the Continent, it has delivered returns in excess of both its benchmark – the FTSE All-World Developed Europe ex UK Index – and the FTSE All-Share Index.
Ingram says: ‘We have 1,000 companies on our radar and we look to invest in 60 at any one time. So in effect we’re looking for the best six per cent of ideas.’
Ingram does not invest in British companies or emerging European equities (shares traded in countries such as Hungary, Poland, Russia and Ukraine), but otherwise the portfolio takes no account of markets or sectors.
In the past five years, the fund has outperformed most of its European peers
Ingram says: ‘I don’t care if a company is a food manufacturer or an assembler of cars based in Germany or France. It is key characteristics we are looking for.’
These include cheap valuations, good momentum – performing above expectations – and quality of management. Ingram says: ‘Lots of chief executives want to empire build. But what turns us on are bosses that want to drive up the company’s share price.’
There is no room for sentimentality. Holdings are rarely kept for longer than six months so if a share performs, profits are taken while if it doesn’t losses are cut quickly.
‘We’re constantly looking for new ideas,’ says Ingram.
He is confident that at current valuation levels, annual returns of 10 per cent can be expected over the next five years.
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