In addition, the fund has one of the longest-established GBP-hedged share classes, which has delivered first-quartile performance over one, two, three and four years1.
Following our investment philosophy, we aim to invest in attractively valued, high-quality stocks, supported by positive momentum. We apply a consistent and disciplined approach in researching and identifying these characteristics across a continental Europe equity universe of approximately 1,200 stocks.
When identifying attractively valued stocks, we look at how the stock is valued relative to the market and its peers. We also ensure that the underlying company is fundamentally sound, in other words, that the stock is not cheap for a good reason.
Our definition of high quality means that we identify profitable companies with sustainable earnings and management teams with good capital discipline. We aim to invest in companies that can sustain profit growth and margins over a long period of time. We expect management to be prudent, not profligate, with shareholder funds. In particular, we are wary of companies with a track record of issuing shares to make acquisition. Instead, we prefer to invest in companies that can finance their growth through internally generated cash flow. In the absence of growth opportunities, we like management to return funds to shareholders, which we can then employ elsewhere.
To identify stocks with positive momentum, we look at both share price and earnings. Stocks that have performed well over the last 12 months tend to continue to perform well. Conversely, stocks that have performed poorly tend to continue to underperform. This analysis allows us to run our winners and cut our losers. Earnings momentum is important to our process because one revision to expected earnings tends to be followed by another revision in the same direction. Our decision-making process isn’t affected by a sell-side analyst’s recommendation for any given company, but we do analyse in detail the direction of underlying forecasts. The direction and magnitude of any changes are often an indicator that a stock will outperform or underperform in the future.
Once we have identified potential opportunities, our portfolio managers ensure each stock we select has one or more of the style characteristics we seek, and confirm that those stocks we don’t like do not exhibit these styles. The portfolio managers also consider if there are any additional factors that may influence an individual stock’s performance, such as management changes or corporate activity.
Our portfolio managers select individual stocks that have one or more of the Value, Quality, and Momentum characteristics we seek. They only invest in the stocks that they like the best based on our stock selection process.
They strive to invest in the best opportunities in the continental European market – wherever they are – irrespective of their benchmark weighting or market capitalisation. What’s more, they focus on maintaining a high level of exposure to the value, quality and momentum characteristics that we believe will help generate sustained alpha.
To learn how the JPM Europe Dynamic (ex-UK) Fund can provide your clients with unconstrained exposure to the European recovery, visit jpmorgan.am/jpm-eud
For Professional Clients only – not for retail use or distribution. 1Performance relates to the JPM Europe Dynamic (ex-UK) Fund A – Net Accumulation, NAV to NAV, with any income (gross) reinvested. Inception: 30 September 2004. 3Performance relates to the JPM Europe Dynamic (ex-UK) Fund A – Net Accumulation (GBP hedged) share class, NAV to NAV, with any income (gross) reinvested. Inception: 01 September 2010. Benchmark is FTSE All-World Developed Europe ex UK Index (Net). Unless otherwise stated, all information is sourced J.P. Morgan Asset Management as at 31 March 2015. The Investment Manager seeks to achieve the stated targets/objectives. There can be no guarantee the objectives/targets will be met. Any forecasts, figures, opinions, statements of financial market trends or investment techniques and strategies expressed are unless otherwise stated, J.P. Morgan Asset Management’s own at the date of this document. They are considered to be reliable at the time of writing, may not necessarily be all-inclusive and are not guaranteed as to accuracy. This material does not contain sufficient information to support an investment decision and investors should ensure that they obtain all available relevant information, including fund specific risk warnings, before making any investment. The value of investments and the income from them may fall as well as rise and investors may not get back the full amount invested. Investment is subject to documentation which is comprised of the Prospectus, Key Investor Information (KIID) and either the Supplementary Information Document (SID) or Key Features and Terms and Conditions, copies of which can be obtained free of charge from JPMorgan Asset Management Marketing Limited. Issued by JPMorgan Asset Management Marketing Limited which is authorised and regulated in the UK by the Financial Conduct Authority. Registered in England No: 288553. Registered address: 25 Bank St, Canary Wharf, London E14 5JP.
