Mark Campbell, Head of UK sales, JP Morgan, Fleming Asset Management Sir I read with interest ...
Head of UK sales, JP Morgan, Fleming Asset Management
I read with interest your editorial highlighting the decision by one fund management house to close a number of its style-based portfolios (Schroders says style funds were never in fashion, 23 June).
While this decision may have made business sense for Schroders, I would like to point out that the concept of style investing remains a very real issue for investors, is commonplace in the US and offers the prospect, if got right, of producing substantial outperformance. Externally produced data suggests that both value and momentum in themselves are able to produce outperformance over the long term ' in his work 'What works on Wall street', O Shaugnessy performed simple backtests on pure value and growth strategies, demonstrating that a portfolio of the cheapest stocks in the US market, rebalanced every year, would have outperformed a portfolio of the most expensive stocks by more than 12% per annum over the past 45 years.
And as you point out, combining growth and value in a single fund makes good investment sense and this is actually exactly what we do in all of our UK and European funds. In our experience, by combining both strategies to create a portfolio which is long of value and long of growth, one can achieve outperformance in 70-90% of quarters because the portfolio is unlikely to fall foul of a style rotation in the market.
This is why we offer funds like JPMF Premier Equity Growth and JPMF UK Dynamic Fund, which combine the best growth and value stocks we can find.
But we also offer the JPMF UK Strategic Value Fund for those investors who want to introduce a value tilt to their portfolio or who want to rebalance a growth-heavy strategy.
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