JP Morgan is set to launch a Luxembourg-based Global Teletech fund to capitalise on the growth prosp...
JP Morgan is set to launch a Luxembourg-based Global Teletech fund to capitalise on the growth prospects in the technology and telecoms sectors.
Jon Little, sales director at JP Morgan Europe, said: "It appears to us that the boundary between these two sectors is increasingly arbitrary, with telecoms companies providing the infrastructure for the internet and tech companies such as Microsoft buying up cable companies.
"Additionally, the telecoms element of the fund adds to its overall defensive characteristics. Investors are often concerned that some technology companies, while they have huge growth potential, are on extremely high valuations and have no earnings. By comparison, most of the telecoms companies have real earnings, infrastructure and assets."
The addition of the telecoms adds a regional diversification tilt to the portfolio, with most of the telecom stocks based in Europe while many of the tech stocks are in the US, according to Little.
The fund will be managed by JP Morgan's Global Micro Group, a team of portfolio managers and analysts that runs most of the company's more aggressive portfolios.
The group is headed by Tom Madsen and the lead portfolio manager is Shawn Lytel.
The fund will be managed against a customised market cap weighted index representing the MSCI World Information Technology sector and the MSCI World Telecommunication Services sector.
Little said: "A team of 13 analysts covers the telecoms and technology sectors globally. These analysts calculate long-term expected returns for the stocks and assign an 'A- rating' to their top picks.
"Utilising this research, a team of three portfolio managers work with the analysts to select the stocks to be held in the portfolio. The portfolio is diversified across 10 sub-sectors within the two industries, in order to reduce risk. Regional allocations are also monitored by the portfolio management team.
"JP Morgan has a valuation-oriented style and in the past the technology sector was a challenge, given that some of these companies have no earnings record. About two years ago we overhauled our valuation processes on tech stocks, adding momentum and growth filters into our research."
The portfolio will be fairly concentrated with between 40-70 companies and have an anticipated turnover of 50%-80%. It will mainly invest in developed markets but will have some emerging market exposure. The charges are 2% for class A, 1.5% for class B and 1.35% maximum for class C.
£500,000 annual fee income
Data by LinkedIn
£42m assets under influence
Up a fifth on 2015/16
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