Hold or Fold? JP Morgan Europe Fund

What Citywire says

The long-term track record of JP Morgan’s Europe fund is good, with a loss of 20.3% over three years and a return of 24.2% over five years that place it in the upper reaches of second quartile. Over 10 years, performance is impressive, with a 35.4% return placing it sixth out of 58 in the sector over that time period.

But recently, it has seen a downturn. A loss of 9% over three months and 10% over one month to the end of February place it 87 out of 106 and 64 out of 111 respectively. Manager John Baker, who runs the fund along with Jon Ingram and Anis Lahlou-Abid, also lost his Citywire A-rating last month.

The team has been dynamic in the last 12 months in managing the fund. Financials has consistently been the largest sector weighting, but its weighting relative to its benchmark has fluctuated.

The fund entered 2008 with an underweight of under 4% to financials, a position that grew to more than 10% underweight by the end of July, before being brought back up to a slight overweight by the end of October, and then cut again to a 4.2% underweight by the end of January that remained throughout February.

Some of these movements are explained by the managers’ position on general insurers, to which they increased exposure in the second half of 2008, predicting more business for existing players in the wake of AIG’s troubles.

The fund has been consistently underweight in banks – and has reduced exposure to minimal levels in Italian bank Credito and Deutsche Bank. It has, however, maintained an overweight in French bank BNP Paribas, which JPM said had escaped the effects of the sub-prime crisis and had helped the fund outperform its benchmark.

What the advisers say

Steve Buttercase

Independent financial adviser