JPMorgan Emerging Markets Equity Fund

Scorecard
3 / 5 Stars
Lipper
3 3 1 2 5
Zacks Investment Research
5 (Strong Sell)
Standard & Poor's
3 / 5 Stars
TheStreet.com
E+ (Sell)

#68 in Diversified Emerging Mkts

U.S. News evaluated 202 Diversified Emerging Mkts Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

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Performance

The fund has returned -8.34 percent over the past year, -1.93 percent over the past three years, 15.16 percent over the past five years, and 9.79 percent over the past decade.

Trailing Returns Updated 02.28.2014
Year to date -3.7%
1 Year -8.3%
3 Years (Annualized) -1.9%
5 Years (Annualized) 15.2%
10 Years (Annualized) 9.8%

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Summary

Typically, a fund with a compact portfolio is more aggressive. In the case of the JPMorgan Emerging Markets Equity fund, the strategy has lead to more stable growth.

As of March 05, 2014, the fund has assets totaling almost $2.57 billion invested in 82 different holdings. Its portfolio consists of at least 80 percent emerging market stocks at all times.

This fund only buys the largest and fastest growing companies. Most of the fund’s assets are parked in large-cap stocks. Because the fund is overtly bottom-up, nation and sector contexts factor very little into investment decisions. With almost a third of its portfolio tied to emerging market financial stocks, the fund acts as a large bet on the health of the emerging market banking sector. The fund has returned -8.34 percent over the past year and -1.93 percent over the past three years.

The long-term strategy of the fund is to hold fast growing companies for the long haul. It has an average holding period of 10 years for its securities, which means that is has sold very little of its portfolio since its inception in 2001. The has resulted in low trading costs for investors. The fund has returned 15.16 percent over the past five years and 9.79 percent over the past decade.

Investment Strategy

Management makes investment decisions based on reports produced by individual country specialists. The specialists rank countries based on both expected short-term price moves and long-term company growth prospects. Managers also consult currency advisers to determine whether to hold a particular country’s securities in the local currency or in U.S. dollars. The strategy is bottom up, so managers tend to pick companies first and foremost rather than factoring in the economy in which it’s domiciled. Management tends to hold its foreign securities in foreign currencies, as a hedge against a falling dollar. The fund hold’s stocks for an average of ten years.

Role in Portfolio

Morningstar calls it a specialty fund because of its focus on emerging markets stocks.

Management

The fund has been in existence since 2001. Managers Austin Forey, Ashraf el Ansary, Greg Mattiko replaced the former managers in 2005. Richard Titherington joined as co-manager in 2009. Taking each manager’s experience into consideration, the fund’s management has experience in financial, tech, U.S. equity, global, mid-cap, Middle East, European emerging markets and long/short funds.

Fees

JPMorgan Emerging Markets Equity Fund has an expense ratio of 1.76 percent.

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Risk

Morningstar says the fund has an overall low risk. By hedging against the U.S. dollar by holding many securities in foreign currencies, their strategy could backfire if the U.S. dollar does not see the inflation that has been widely forecast over the next decade. The fund also places a third of its assets in financial stocks, a bet that risks major losses if the emerging markets face a banking crisis.

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