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Q&A: 10 Questions for Anne Lester of J.P. Morgan

The head of retirement solutions shares how plan providers can best guide individuals

Laura Lallos



Each issue of  Morningstar magazine closes with “10 Questions,” a wide-ranging question-and-answer session with a proven investor.

Laura Lallos, Morningstar magazine’s managing editor, interviewed Anne Lester of J.P. Morgan in February 2018. Lester is a portfolio manager and head of retirement solutions for J.P. Morgan Asset Management's global investment management solutions. She developed the firm’s defined-contribution asset-allocation strategies, including the JPMorgan SmartRetirement target-date series, which has earned a Morningstar Analyst RatingTM of Gold. Lester and her team won the 2014 Morningstar Allocation Fund Manager of the Year Award. They’ve been nominated three times, most recently for 2017.

Q:  What are your return expectations for the next decade?

Lester: Our long-term capital market assumptions continue to forecast relatively muted returns. This year, the main drivers of return are positive from a global growth perspective, but given current valuations in both equity and fixed-income markets, our starting point is relatively rich, certainly compared to 10 years ago.

Q: How can retirement investors succeed in this environment?

Lester: Plan sponsors can help by encouraging greater savings through automatic enrollment and contribution escalation, and by making portfolio diversification easier through re-enrollment into qualified default investment alternatives like target-date funds. They can also employ active management. With a lower outlook for market returns, we believe excess returns are critical.

Q: How can plan providers best guide individuals?

Lester: By not relying on averages—for retirement age, life expectancy, investment returns. No one is average. The strongest retirement plan should be designed for the edges as well as the middle. Employers and providers should personalize data to the greatest extent possible.

Q: Which equity markets offer the best values?

Lester: We think the best value is offered by broadly diversified positions across risk assets, especially overseas equity markets. This includes both developed and emerging markets.

Q: Are you positioning your portfolios against rising interest rates?

Lester: While we will from time to time take advantage of our tactical views to position the portfolio against rising rates, we don’t think that the time is quite right now. That being said, one advantage of having a great set of underlying fixed-income portfolio managers is that their underlying duration views naturally filter into our portfolio.

Q: Where would you be working now, if not within financial services?

Lester: Given how I spend my free time, I’d either be a novelist or a professional musician. (I play viola and piano.) That is assuming I didn’t get back into public policy in some way, which is where I started working out of college.

Q: What prompted your shift from government to investing?

Lester: I got frustrated working in politics by the relatively slow pace of progress and lack of a bottom line—the consistent, repeatable measure of success was an election.

Q: How are the two pursuits similar?

Lester: Now, over 30 years later, I do realize that progress on systemic issues like retirement takes time, and persistent effort. To be successful in any endeavor, you have to have a plan and a process. That is as true for politics as it is for investing, and for performing music for that matter.

Q: You worked for a member of parliament in Japan. Do you return for visits?

Lester: I’ve been able to travel to Japan on business fairly often, but not as often as I’d like!

Q: Where was your last vacation?

Lester: We were able to take our two college students (both boys) skiing the first week of January. It was the first time we were able to liberate ourselves from the K–12 school calendar, and it was marvelous! I love being in the mountains, and skiing is a wonderful way to spend time with older teens and young adults.

This blog post is adapted from an article that originally appeared in the April/May 2018 issue of Morningstar magazine. Read the full article.

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