The JPMorgan Asean Equity Fund is a fund domiciled in Luxembourg, which invests mainly in companies (stocks) of countries that are members of ASEAN (Association of East Asian Nations).
The first thing to say is that this is an equity fund, it has equity-level risk, so it is a fund for an investor profile that understands how an equity portfolio works, this means that it has a reasonable level of volatility.
JP Morgan Asset Management has a long history of generating quality investment products, and this is an emblem of the house, which has almost 14 years of history (launched in 2009).
The management team has on average more than 20 years of experience and a long track record managing the fund. This is, undoubtedly, the first precedent that speaks of quality. In general, in Asset Management there is a correlation between successful funds and management teams that have been in charge of their management for a long time.
The team is led by Pauline Ng, who specializes in ASEAN countries and is the Head of the ASEAN Team. She is based in Singapore and joined JP Morgan in 2005. She has over 23 years of investment experience.
At the end of January 2023 this strategy had over US$ 1.6 Bn of assets under management and its benchmark is the MSCI AC ASEAN 10/40 Index (Total Return Net).
Performance of the JPMorgan Funds – Asean Equity Fund
Source: Factsheet JPMorgan Funds – Asean Equity Fund, as of 31-01-2023.
The fund, as can be seen in the graph above, has a consistent performance, which is what is sought when selecting investment vehicles. In this case, for each calendar year, from 2013 to 2022, it can be seen, that each calendar year, the fund’s return, discounted for cost, exceeds its benchmark, except for 2018, there was a small underperformance (very small for the level of volatility).
Source: Factsheet JPMorgan Funds – Asean Equity Fund, as of 31-01-2023.
As you can see above, looking at the 3-year and 5-year returns, which are the measures that institutional investors consider (because they give an indicator of consistency rather than just a snapshot of the last year), you can see that the fund adds alpha (outperforms its benchmark).
Portfolio Analysis
| Measurement | 3 years | 5 years |
| Correlation | 0,99 | 0,99 |
| Alpha (%) | 5,01 | 3,57 |
| Beta | 1,03 | 1,03 |
| Annualized volatility (%) | 21,32 | 18,41 |
| Sharpe ratio | 0,26 | 0,06 |
| Tracking error (%) | 2,86 | 2,68 |
| Information ratio | 1,77 | 1,35 |
Source: Factsheet Fund JPMorgan Funds – Asean Equity Fund, al 31-01-2023
In reviewing the risk indicators in the table above, the first thing to note is that the 3-year and 5-year alpha is positive and significant, which means that it adds value over the market beta (benchmark).
The second important thing is that the Information Ratio, which is alpha over the tracking error, basically how it uses the deviation from the benchmark, is positive, which means that the team is right to have bets and not be indexed to the benchmark.
In relation to the market Beta, it is greater than 1, which indicates that it is a fund that has more systemic risk than the benchmark, in other words, it has all the sails set to sail.
Other indicators for JPMorgan ASEAN Equity Fund
Source: Factsheet JPMorgan Funds – Asean Equity Fund, as of 31-01-2023.
The country allocation is good to keep in mind although it is not a critical element, as the investment result by country is a result of the bottom-up investment by the company, which is where this team aggregates alpha.
On the other hand, long or overweighted sectors such as financials, industrials, materials, and consumer discretionary are cyclical or high Beta, which is consistent with the Beta of 1.03.
Positioning of Chilean Pension Funds in the Fund
Source: LVA Fundmate Analysis https://fundmate.app/ as of 31 January 2023.
This is a section that has become an obligatory part of every product analysis we do. The reason is simple, the AFPs are institutional investors with sophisticated investment teams, with access to information and investment processes of global stature, therefore, if their analysis indicates investing in a fund such as the JPMorgan ASEAN, it is another argument that cannot be overlooked.
And here we can see that the Chilean AFPs have been investing in this fund month after month since August 2022, with more than US$ 840 million invested in it.
Conclusions
| Advantages | Inconveniences |
| -Positive Alpha and Information Ratio. -Top and experienced team. -Solid History and Track Record. -House that supports it. -Institutional Background. | -Cyclical fund, Beta >1, volatility, for investors who understand the asset. |
The JPMorgan ASEAN Equity fund is a fund with Track Record, Experienced Team, consistent alpha, and backed by JPM Asset Management with a strong institutional character, it is undoubtedly a must if you have ASEAN in your portfolio.
