This is a concentrated, high-conviction fund built off JP Morgan’s extensive research platform. Hong Kong based managers Joanna Kwok and Mark Davids will invest in the shares of up to 60 companies of any size, primarily focusing on quality, growing businesses to generate superior capital gains than their peers and the wider market.
JPM Asia Growth fund makes the most of JPM’s emerging market research team, which was enhanced in 2015 to make an impressively comprehensive resource of specialist, local knowledge from across the Asia Pacific region. The two managers put the conviction portfolio together with a pragmatic and holistic approach, allowing the superior analysis and stock selection to drive the fund’s returns.
JP Morgan Asset Management is one of the largest asset and wealth managers in the world. It has more than 150 years of investment experience, providing clients with strategies and expertise that span the full spectrum of asset classes through its network of investment professionals located around the world.
Joanna Kwok and Mark Davids have been running the JPM Asia Growth fund together since its revamp in 2015. Joanna joined JPM in 2002 as an analyst in the fixed income team. She switched to equities in 2005 as a portfolio manager specialising in smaller companies. Prior to this, she spent three years with PwC in London - where she qualified as a chartered accountant - and one year in Hong Kong as a senior associate in the firm’s banking and capital markets division. Joanna has a BA in Natural Sciences from Downing College, Cambridge University.
Mark Davids has been with JPM since 1997, starting out as a pan-European investment analyst. He had a previous role at the European Commission and has a BA in History and German from the University of Manchester, as well as an MSc in International Political Economy from LSE. In 2007, he relocated from London to Tokyo to head the behavioural finance desk, before moving to Hong Kong in 2009 to expand this role across JPM’s Asia Pacific divisions. He is also a CFA Charterholder.
Despite all the noise in markets, the story around growth in Asia continues to centre around 4.5 billion people who live, work and consume in this fast-moving, exciting region
Joanna KwokFund manager
JPM Asia Growth is a high conviction and concentrated fund, primarily focused on finding high quality, growing companies. The portfolio is built using JP Morgan’s extensive emerging market and Asian analyst resource located across the globe. This expertise includes 38 research analysts and 27 country specialists, plus 4 macro and quant analysts.
All the analysts will use the same framework with which to analyse their stocks and the reports they write will be uniform to enable consistency for the fund managers. These reports will look at three key areas: economics, duration and governance. The first of these will be based on the firm’s financial statements, looking at margins, debt levels and cash generation.
Within the process, there is a 98 point checklist of yes/no questions for analysts to highlight red flags. The more there are, the more reward they need from a company. This will help the managers identify the risks of each stock and see whether there is an acceptable level of reward.
Plenty of company meetings take place – all in the mother tongue of the board to ensure nothing is ‘lost in translation’.
From this work, Joanna and Mark will build their portfolio. In total, they will have a maximum of around 60 stocks. Shares will be sold on change in investment thesis, such as industry structure change or unusual corporate governance behaviour such as capital indiscipline. The managers will also sell if a company fails to deliver expected earnings or reaches an excessive valuation.
ESG - Integrated
JPM considers ESG issues as integral to the investment process and will rarely invest in a company if it is involved in a controversial industry or practice. Each of the Environment, Social and Governance elements are considered when performing stock analysis, with an emphasis on corporate governance. JPM takes a three-pronged approach to ESG: Research: JPM has a 40-question ESG Checklist which has 12 questions on environment, 12 on social and 16 on governance. Additionally, its Materiality Framework identifies the five key sustainability issues that are relevant for 54 sub-industries. Companies are scored on these issues based on the analysts’ fundamental views, allowing teams to identify best-in-class companies. Engagement: Corporate engagement is conducted by JPM’s analysts and portfolio managers in partnership with the Investment Stewardship Team, assesses how companies on the Investment Stewardship Focus list deal with and report on social and environmental risks and other issues specific to their sectors and/or industries. Portfolio construction: Conviction is considered a function of the quality of the business and understanding of the opportunity and the risks, which are informed by JPM’s Strategic Classification, Risk Profile and Materiality Framework.
Joanna and Mark can have a maximum active weight of +5% of a stock and can vary their country and sector weights by ±15%. This active weight, and the concentrated portfolio, means that a large bulk of the JPM Asia Growth fund will be in the top ten names. Due to fund rules, the maximum stock weight a fund can have is 10%, meaning there may be cases where Joanne and Mark are underweight stocks they like, as they are larger than 10% in the index.
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