JPMorgan Asset Management has brought to the market a fund which removes asset allocation decisions ...
JPMorgan Asset Management has brought to the market a fund which removes asset allocation decisions from the investment process and aims to deliver equity-like returns with much lower volatility.
The JPMorgan Progressive Multi-Strategy fund is a closed-end investment vehicle domiciled in Guernsey.
It will primarily invest in products from across the group's various global divisions, although it can hold third-party vehicles if required.
Initial asset holdings will cover equities, bonds, property and hedge funds, with commodity and infrastructure slated as possible additions in the future.
JPMorgan's global head of equities Martin Porter will oversee the product, with input from regional heads including European equities CIO Chris Complin.
His US and Asian counterparts will represent their respective areas, with the vehicle broadly split between the three regions.Overall, the product is designed to deliver equity-like returns with much lower volatility, reducing risk by diversification across the various asset classes.
Complin said the vehicle differs from the recent crop of open-ended multi-asset products in that asset allocation decisions are removed from the process.
He added: "The system basically leverages up the asset classes so they all generate a similar level of return and risk. Known as post-modern portfolio theory, this is a similar process to that used on Bridgewater, one of the largest hedge funds in the world."
As a basic example, if equities are offering 10% and bonds 6%, the process gears the latter up so it offers the same level of performance.
Looking at the portfolio, it includes five so-called buckets, namely pure alpha, hybrid alpha, equity beta, bond beta and property beta, with each of these positioned to offer 20% of the overall return.
All three regional heads will nominate at least one product from their area to meet these definitions, meaning the vehicle will have at least 15 constituents.
JPMorgan said the charging structure on Progressive Multi Strategy is simpler than other layered vehicles, with a single 1.75% management charge and no performance fee at vehicle level.
While there are no charges to pay on the underlying holdings, investors are liable to any performance fees payable on these funds.
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