Co-managed by James Illsley, Nicholas Horne and Callum Abbot, JPM UK Equity Plus Fund follows a similar approach to the pan-European SICAV version, Europe Equity Plus Fund, which has beaten the market by 6% annualised over the past five years.
The multi-cap fund will hold 70 to 220 long positions in stocks that the managers believe are cheaper than the market, with higher quality and better momentum characteristics.
The fund will also hold 35 to 100 short positions, while maintaining a net exposure to the FTSE All-Share of 100%.
Illsley called active extension the “most efficient way” in identifying both long and short opportunities.
“The concentration of the UK equity market, which is heavily skewed towards large companies, also really lends itself to active extension,” he said.
“Beyond the handful of mega-cap stocks that dominate the FTSE All-Share index, the vast majority of companies have index weights less than 0.5% of the index. A long-only portfolio manager can only express views on these smaller stocks by not holding them, but their slight weight in the index renders this impact marginal.
“However, an active extension manager with the flexibility to have a greater negative active weight in unattractive stocks can more efficiently align their views with their positions in the portfolio. This is a clear example of how the active-extension structure makes better use of the manager’s insights by increasing the active weight allocated to the best ideas.”
The C share class of JPM UK Equity Plus Fund will have a Total Expense Ratio of 1.13%, and the vehicle will be classified in the IA UK All Companies sector.
JP Morgan will market the fund as sitting between JPM UK Active Index Plus (low risk relative to the benchmark) and JPM UK Dynamic Fund (benchmark unaware, high alpha seeking).
