JPMorgan Emerging Markets IT
Launched in 1991, JPMorgan Emerging Markets Investment Trust has an established long-term track record of investing in emerging market equities. The extensive team at JPM take a long-term approach to stock picking, with the focus exclusively on companies, rather than countries, in the emerging markets space.
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Austin Forey, Co-Manager Austin Forey, Managing Director at J.P. Morgan Asset Management, is a portfolio manager for the Global Emerging Markets (GEM) Focused strategy within the Emerging Markets and Asia Pacific (EMAP) Equities team, based in London. He has been with the firm since 1988 and has managed GEM portfolios since 1994. Before this, Austin was deputy head of U.K. research and worked as a research analyst covering engineering and financial sectors. He also co-managed a mid-cap investment trust and two specialist unit trusts. Austin holds a B.A. and a Ph.D. in Modern Languages from Cambridge University.
John Citron, Co-Manager John Citron, CFA, Executive Director at J.P. Morgan Asset Management, is a portfolio manager in the Emerging Markets and Asia Pacific (EMAP) Equities team, based in London. He joined the firm in 2009 and previously served as a research analyst on the EMAP team, focusing on technology and industrial sectors, as well as within the European Equities Research team, covering capital goods, aerospace, and defense. John holds a B.A. (Honours) in Philosophy, Politics, and Economics from Oxford University and is a CFA charterholder.
Austin Forey, Co-Manager Austin Forey, Managing Director at J.P. Morgan Asset Management, is a portfolio manager for the Global Emerging Markets (GEM) Focused strategy within the Emerging Markets and Asia Pacific (EMAP) Equities team, based in London. He has been with the firm since 1988 and has managed GEM portfolios since 1994. Before this, Austin was deputy head of U.K. research and worked as a research analyst covering engineering and financial sectors. He also co-managed a mid-cap investment trust and two specialist unit trusts. Austin holds a B.A. and a Ph.D. in Modern Languages from Cambridge University.
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Quote from the Fund Manager
A few of the positions owned have now been in the portfolio for two decades already. If you find a great business, it has always seemed to us that you should own it for as long as possible.
Austin Forey
Co-Manager
Investment process
JPMorgan Emerging Markets Investment Trust takes an active approach to investing in emerging markets with Austin looking at the growth of companies, rather than specific countries. He targets high quality businesses that can outperform over a prolonged period of time and, as a result, the average company is held in the portfolio for 10 years, with a number of the larger positions held for an even greater period of time.
Austin is ably supported by a research team of almost 100 investment professionals from the Emerging Markets and Asia Pacific team (EMAP). The team members speak more than 20 languages between them and conduct more than 5,000 interviews with company management each year.
The investment process focuses on understanding the basic economics, duration, and governance of any company covered. The team conducts a strategic risk profile of every firm in its investment universe; companies which qualify are then analysed for their five-year expected returns and the team then decides whether the shares are at a price it is willing to pay.
Austin and the team believe emerging markets are becoming more like developed markets – citing the growth of digitisation and the development of internet-based solutions in the region. As a result, the portfolio is largely invested in the likes of software services, internet services, gaming and consumer brands, all of which do not have to invest large amounts of capital to create high returns. The team believes these companies require less-leverage and ultimately generate more cash for shareholders.
The trust tends to own nothing in the energy, healthcare, real-estate or utilities sectors, and very little in materials.
Environmental, social and governance (ESG) issues are integrated fully into the risk analysis conducted by the analyst team. Austin will also take advantage of the trust’s closed-ended structure to access some smaller companies, where the liquidity of the shares would not be appropriate in a fund trading on a daily basis – however, these additions are made selectively and never form a large part of the portfolio. The final portfolio will typically hold between 60-100 stocks.
Risk
It should be noted that historically, emerging market companies (and investments in their shares) have shown greater volatility and may be subject to certain political and corporate governance risks which are not typically associated with more developed markets and economies. However, risk is mitigated by the extensive analysis conducted by the research team which covers each stock in the investment universe.
ESG
ESG - Integrated
JPM’s investment strategy looks to invest in companies that run their businesses in a sustainable way and the research approach reflects this. The proprietary 98-question Risk Profile assesses multiple factors, including ESG, with an emphasis on governance, as the team believes that businesses with strong governance tend to outperform over time. Engagement is key in this regard, so over 5,000 company meetings are carried out annually to enhance the team’s understanding of issues and to encourage best practices. The team also uses a Strategic Classification tool as part of the portfolio construction to assess a business’s potential for long-term value creation, and will focus on the companies which carry a high rating.
Gearing
The trust can gear up to 20% of net asset value, although Austin never intends to use the facility to try and time the market.
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