Fund in Focus: JP Morgan Global Consumer Trends

JP Morgan fund manager Peter Kirkman chooses stocks based on the main themes of demographics and urbanisation, aspiration, and health and wellness

Linsay McPhater 21 August, 2014 | 4:40PM
Facebook Twitter LinkedIn

JP Morgan Global Consumer Trends is a compelling choice for investors seeking to benefit from changes in global consumer trends. 

Peter Kirkman has managed the fund since inception in 2008. Although his background is in Japanese equities (he was formerly CIO of the JPM Fleming Japan team), he has the significant support of JPM’s global equity resources. Kirkman made a significant personal investment at the fund’s launch, which we think aligns his interests with investors'. He was also a key force in conceiving this fund’s strategy. 

Kirkman runs the fund on a thematic basis, aiming to invest in the beneficiaries of long-term shifts in consumer behaviour. The main themes are demographics and urbanization, aspiration, and health and wellness. These themes are determined by the manager, informed by constant discussion and debate with the group’s sector analysts and economists. At the stock level Kirkman conducts rigorous, bottom-up financial analysis of all potential holdings and has a strong focus on ensuring he can identify sufficient upside to a realistic company valuation.


The manager typically favours companies with a strong growth profile from across the market-cap spectrum; he is comfortable investing in the small- and mid-cap space. Kirkman avoids individual stock positions of over 5% and he is disciplined with regard to valuations. Given his thematic views on demographics and urbanisation, he is willing to hold one third of assets directly in emerging markets. He monitors the portfolio for unintended macro bets, such as dollar strength.

The manager typically favours companies with strong growth profiles from across the market-cap spectrum. He is comfortable investing in the small- and mid-cap space and this is consequently very much an all-cap fund. Given Kirkman’s thematic views on demographics and urbanisation he is willing to hold one third of the assets directly in emerging markets. In Jan 2013, he became incrementally more cautious. He was skeptical of a general global industrial recovery and the US housing market recovery. This is reflected in the view that Western franchises and industrial companies in developed markets are expensive compared with emerging-markets consumer stocks.

He has had a strong preference around the health & wellness theme, which accounts for 30% of the fund. He has continued to keep the weighting to emerging markets at around 30% of the fund, as established in early 2011 when he saw value in the region. He has a high-conviction position in domestic Chinese companies, in particular banks and real estate, where he has continued to see opportunities as valuations look attractive following political issues and global growth concerns. The manager is aware that stocks in the region incorporate higher risk, so individual positions are below 2%.
The fund's EM exposure demonstrates Kirkman's preference for growth and his aversion to overpaying. EM exposure dropped below 11% in June 2010, reflecting his view that emerging consumer stocks were arguably expensive compared with Western franchises. In 2011, the EM exposure was increased to around one third of the fund and has been maintained since, as he believes valuations had become attractive. 

From launch to July 2014, the fund's performance has been strong in both absolute terms and relative to the MSCI World benchmark, but it lags the category, which is more relevant for investors seeking consumer exposure. The fund’s venture into emerging markets and focus on structural change means investors need to take a long-term approach here: The relative underperformance in 2011 and 2012 owed largely to its China exposure. 

Our high opinion of Kirkman’s experience and his long-term objectives continue to give us confidence in this fund. It retains its Bronze Rating.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

About Author

Linsay McPhater  is an Investment Research Analyst for Morningstar

© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Modern Slavery Statement        Cookie Settings        Disclosures