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Building a Robust Fund Business

10 questions with George Gatch, CEO of Global Funds for J.P. Morgan Asset Management.

MorningstarAdvisor.com, 08/13/2012

This article originally appeared in the August/September 2012 issue of MorningstarAdvisor magazine. To subscribe, please call 1-800-384-4000. 

1. In 10 words or fewer, how did you build such a successful fund business?
Intense focus on investment results, market insights, and sales excellence.

2. What areas is J.P. Morgan targeting for growth?
We believe that there is a generational opportunity to help individuals and companies meet their retirement and retirement-income needs. Our experience as a record-keeper and investment manager allows us to help make participants’ decisions easier while incorporating J.P. Morgan’s most sophisticated thinking. We are expanding our suite of tools and investments to help advisors and their clients generate income, manage volatility, and secure real returns.

3. Why have alternative investments been such an important focus of J.P. Morgan?
Investors continue to be challenged, and they will find it harder to come by the returns enjoyed over the past 30 years. Equity returns have been volatile, and a rate backup may impact fixed-income portfolios. Also, “risk-on/risk-off” trades have created an environment of high correlations. We believe alternatives provide noncorrelated approaches to a portfolio that may reduce risk while increasing returns. The likelihood of an investor staying invested increases with smoother return, which alternatives can provide.

4. Should fund companies cut fees in response to falling yields?
We are always analyzing the total expense ratios of our funds, given market environment and the resources required to deliver world-class investment capabilities to our funds’ shareholders.

5. You have a strong advisor outreach program. What role has that played in J.P. Morgan’s success?
It has been a key part of how we differentiate ourselves. Access to our best investors and strategists provides insights to help our clients be effective in navigating a complex and volatile world.

6. J.P. Morgan has a huge stable of career analysts. How do you keep them happy?
Our investment process is designed to be research-centric, and the analysts’ work directly impacts a very broad range of portfolios for clients. We give them the right environment and resources to succeed, which is a performancedriven culture with clear metrics that rewards long-term investing success.

7. What attributes make a good analyst?
We specifically look for analysts who can understand and frame long-term trends at the industry and company levels, patient individuals who are willing to take views that don’t always align with consensus, and strong communicators.

8. What makes a good portfolio manager?
A good portfolio manager always starts with a love of the financial markets, coupled with a highly analytical mind and quantitative nature. This must also be complemented by an extraordinary conviction in his or her views, the ability to see the big picture, leadership and communication skills, and a disciplined approach to assessing and managing risk.

9. Word has it you’re a wine buff who loves the outdoors. What’s the best wine to take into the wilderness?
Unfortunately due to its weight, wine is not the best beverage to bring into the wilderness, but a 1990 Hermitage would be awfully pleasant.

10. If you could be any grape, which would you be?
Syrah … strong and robust.

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