Jonathan Miller: Welcome to the Morningstar Manager Check-up. We start with the JP Morgan Emerging Markets fund, where in July 2016 Leon Eidelman was formally recognised as the lead manager. He continues to work closely with Austin Forey, who’s head of the Global Emerging Market team and ran the fund since 1997. The dynamic between the two today sees issues debated on a daily basis.
All this gives us comfort that the investment process, that focuses on quality growth firms, will continue to be consistently applied. This is reflected when you drill into the portfolio and identify the fund’s return on equity. There’s also a pronounced bias towards sectors positively affected by domestic demand and consumption. Given the consistent approach, the established process and considerable investment resources behind this fund, it retains a Morningstar Analyst Rating of Bronze.
Next up we have the Jupiter European fund which Alexander Darwall has managed since its in launch in February 2001. With style in mind, this sits firmly in the growth camp. Darwall seeks companies with proven track records, clear business plans, an entrepreneurial spirit and above-average earnings growth prospects.
They also require a dominant market position and thereby superior pricing power. The wholly bottom up process sees Darwall have regular contact with company management. What you get is a high conviction approach with low turnover, significant sector deviation and a higher mid cap weighting than the index and peers.
The style was out of vogue last year which affected performance but there’s much to like here and we have confidence the fund can continue to deliver strong risk adjusted returns over the long term. It therefore maintains its top Morningstar Analyst Rating of Gold.
Finally, it’s the Mercantile Investment Trust, managed by Guy Anderson of JP Morgan. He stepped into this role in 2016, having spent a few years co-managing the trust with long-standing manager Martin Hudson. This is a UK mid cap trust, whose philosophy follows JP Morgan’s behavioural finance process. This looks to exploit anomalies based on biases of market participants. With that in mind the universe is narrowed down based on price momentum, earnings revisions, value and quality.
A thematic overlay is then applied to construct the portfolio. The team dynamic continues to evolve here, as the final decision now resides with Anderson alone, as opposed to the more collegiate arrangement previously. At this stage we have therefore kept our Neutral Morningstar Analyst Rating on the trust.
