JPMorgan American Investment Trust increases risk in portfolio

The JPMorgan American Investment Trust has started increasing the level of risk in its portfolio. The change in the investment trust follows two years of the trust actively decreasing its risk exposure.

Garrett Fish, the investment trust's fund manager, said he has changed the portfolio's positioning from a more defensive view to capitalise on areas he can see are long term value. He believes now is the time to be investing in equities relative to treasuries.

Fish said, "It is clear we are close to all time lows across many different metrics, including economic activity, consumer confidence and housing, and given the view it is often darkest before dawn, we have started to add more risk to the portfolio, bearing in mind the long term risk return. Any recovery in stock markets could be dramatic, even if timing is unclear, so the portfolio has been adjusted now to ensure we are in the right position when it happens."

Fish has maintained his weighting in large caps as these stocks have provided the most relative out performance in the portfolio. He also remains overweight in technology. However, Fish has made significant changes to sector allocation, moving to an overweight in consumer discretionary and increasing the trust's weighting in financials.

Fish is keen to point out he is investing in specific stocks within these sectors. For example in financials the Trust is investing in companies that are growing their assets but look cheap because of current controversy around the sector. In consumer discretionary he is investing in companies whose competition is weakening and in areas such as automobile parts where consumers look to repair existing cars rather than buy new ones.

In addition to changing positions in the portfolio, Fish said he has also been adding gearing following the trust's 3% cash position at the end of 2007. The investment trust now has gearing levels of 113%. Fish agrees the gearing does add risk to the portfolio but it has enabled him to continue to increase his market exposure.

The JPMorgan American Investment Trust's share price appreciated 5.4% in the last year (to 31.01.09), while its NAV returned -11% and the benchmark, the S&P 500 Index, returned -15.7%. Over three years the investment trust's share price returned 4.2%, the NAV -8.9% and the benchmark -16.3%.