luxembourg-domiciled fund, managed by hugo alexander, will replace the group's poor-performing small-cap fund and invest in FTSE4Good
JP Morgan Fleming (JPMF) has made its first foray into socially responsible investment with the launch of an offshore global equity fund.
Domiciled in Luxembourg, the JPMF Global Socially Responsible fund, to be managed by Hugo Alexander, is the re-engineering of a global small-cap fund and invests in companies included in the FTSE4Good index.
Boudewijn Hoogenraad, head of publishing at JPMF, said the FTSE4Good index has outperformed normal global indices and the demand for this type of investment has increased. The fund will replace the small-cap portfolio, which will cease to exist from the end of September because of poor performance.
JPMF will use bottom-up stock selection on the new fund. However, as it is a global portfolio, the style bias of the bottom-up strategy will vary between regions.
Hoogenraad said different strategies work better in certain regions. In Europe, for example, the focus will be on value and growth as there is potential in both markets. In Asia, company visits will be of added importance because of the lack of information readily available about companies in the region.
Potential stocks will be ranked on three criteria, according to Rob Lay, product director of the global portfolios group at JPMF.
First is the fundamental examination, which looks at where the competitive advantage in the company lies. Price margins are examined as well as valuations. Stocks are then given a one to five ranking, with one indicating a strong buy and five a strong sell.
The global sector analysts then look at the regional rankings and decide how they are performing in a global context. Stocks are then examined in relation to the benchmark and the portfolio is constructed.
Companies must be focused on ethics and only have investments in socially responsible-type products. The employment practices of companies must be of a high standard and they must treat their staff fairly. To be selected in the FTSE4Good index, a company has to be focused on environmental sustainability, social issues, stakeholder relations and human rights.
For a company to be considered environmentally sustainable, for example, it must have good environmental policies and commitments, environmental management systems in place and have produced environmental reports in the past three years.
Asset allocation for the portfolio will be 50% in the US, 20% in the UK, 20% in Europe, 6.5% in Japan and 1.3% in the Pacific and emerging markets. JPMF currently has more than 80 Luxembourg-domiciled portfolios. These include its Asia Equity, Eastern Europe, Europe Dynamic and America Micro Cap funds. Minimum investment in the socially responsible fund is $5,000 and the annual charge is 0.5%. Subsequent investments can be made in minimum $5,000 tranches.
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