JPM Europe Dynamic benefits from a stable and effective team that implements a quantitative model looking to capture momentum. It retains its Morningstar Analyst Rating of Bronze or Neutral, depending on fees.
Team head Jon Ingram has been responsible here since 2007 alongside comanager John Baker; Blake Crawford was named as an additional comanager in April 2019. Along with them, Alex Whyte and Victoria Helvert are also part of the Dynamic team headed by Ingram, which is part of the wider International Equities Group at JPMorgan Asset Management. They sit alongside the research and implementation teams, working closely with them to execute the approach. The global analyst team, whose bottom-up stock research provides deeper insights and fundamental analysis, is strong.
The quant-led model underpinning this offering has been in place since 2000. It screens the most liquid 60% of stocks in Europe, looking for attractively valued names that have high quality and positive momentum. Daily meetings are then held by the team to cover company updates, published earnings changes, changes to estimates, and other relevant news flow around which analysts may carry out further research. The best stock ideas that display positive quality and momentum factors, while also deemed attractively valued relative to the market and peers, are combined to build a core portfolio that’s collectively cheaper than the market. The team’s ability to interrogate the quant model’s output and at times over-ride some signals, shows the managers are adept with their qualitative judgment. New positions are initiated on the premise that a stock is displaying positive earnings momentum. This leads to a high portfolio turnover of around 150% per year. Internal risk systems are dynamic, helping to provide a look-through on positioning, style, and active share.
Overall, the strategy is expected to deliver positive outcomes in stable market environments, where earnings and momentum are driving returns. However, like most quant approaches, inflection points and rapidly changing market conditions may prove challenging.