With more than £20bn of UK investors’ money in over 70 open-ended funds, JPM is one of the largest investment banks operating in this country.
However, despite the size of the organisation, no JPM funds have been awarded five crowns – the highest score possible – under the FE Crown Fund Rating system.
FE Crown Fund Ratings are calculated according to a methodology that focuses on three key areas: the amount of value – or Alpha – added by the manager, volatility, and a test that determines the consistency of the fund.
"In terms of what JPM do for the IFA community in terms of seminars, educational material and market research, they are absolutely fantastic but I find it very hard to find a JPM fund that I can actually use regularly in my clients’ portfolios," said Chris Spear, managing director of Spear Financial.
Kerry Nelson, managing director of Nexus IFA, says she is surprised that the asset manager is languishing a little behind the competition in terms of how their funds are rated.
"JPM are arguably the largest fund house out there and you’d think they’d have all the ingredients to produce some stellar performers," she commented.
"But all the funds I’ve been looking at are average at best and average is simply not good enough in a climate in which it is so hard to make any money. You’d think they could do better than that."
"It goes to show that quantity doesn’t always equate to quality."
Nelson says that JPM Natural Resources is the only JPM fund she uses regularly. Managed by Ian Henderson, it has returned 148 per cent over the last three years, more than the 65 per cent posted by rival Investec Enhanced Natural Resources. However, over the last 12 months the JPM fund has lost 22.2 per cent while the Investec fund has only lost 9.3 per cent.
Performance of funds over 1-yr
Source: FE Analytics
Ignis, on the other hand, has nearly 30 funds with combined AUM totalling more than £3bn. However, only Ignis Argonaut European Alpha has five crowns from FE Trustnet.
Headed up by FE Alpha Manager Barry Norris, the fund has returned 12.2 per cent over the last five years while the average Europe ex UK fund has lost 4.4 per cent.
"I use the Argonaut Euro fund but the other Ignis funds don’t even appear on my radar," continued Nelson.
While JPM has six funds that have been awarded four crowns from FE Trustnet – including the £102m JPM Global Equity Income fund – Ignis has none; neither does it have any funds with three crowns.
The study comes as research indicated investors are increasingly looking to ratings as a method of choosing funds.
Responding to the findings, a JP Morgan spokesperson said: "Last month we had more Citywire-rated fund managers – two of them AAA – than any other fund house. We also have four OBSR AA-rated funds and seven A-rated, so performance isn’t an issue, that’s for sure."