JPMAM step into US market with US Equity Income launch

JPMorgan Asset Management (JPMAM) is to launch a US Equity Income fund on 15th December 2008. The fund will be the first true US equity income product available to UK investors and with US valuations at their most attractive since the 1970's, JPMAM is confident that when global markets do recover, it will once again be the US that leads the recovery.

Clare Hart, who has successfully been running money in the US for over 6 years, will manage the JPM US Equity Income fund. It will invest primarily in large and mid-cap stocks and will aim for total returns from both dividends and capital appreciation, targeting an attractive dividend yield, 1% greater than the S&P 500. Clare is also the lead portfolio manager of a number of US based mutual funds including the JPMorgan Equity Income Fund and the JPMorgan Growth & Income Fund, as well as being responsible for analytical coverage of the financial services and real estate sectors for the US Equity Value Team. JPMAM has vast experience in global markets and this new fund launch adds to an existing strong range of US equity products managed by the group. JPMAM also has a proven ability to manage Equity Income products in the US market and the team itself has been successfully running domestic money for many years.

Jasper Berens, Head of UK retail sales at JPMorgan Asset Management said: "New products from fund management groups can either tend to be too late or too early in the market cycle. We, however, believe the timing for this launch to be pretty much exactly right and, having listened and acted on our client's feedback, we are confident it is a product of significant demand. UK advisers and investors simply have too much money concentrated in UK Equity Income funds at a time when the UK economy is suffering, and will do for the foreseeable future. It must be in the interest of all advisers and investors to partly diversify away from that extraordinary concentration in the UK. There are not only severe questions as to how many UK companies will now not be able to pay their dividends, particularly the banks, but there also exists significantly greater opportunities for dividends in the US with at least 3 times the number of US companies paying out dividends than their UK counterparts. Also in a recent JPMAM poll of advisers the majority think that the US Equity market has the best chance of outperformance with 51% of UK advisers favouring the region over emerging markets, Japan, UK and Europe.

There are many reasons why the US equity market currently looks attractive - US valuations are particularly attractive having rarely been lower and therefore having some exposure to the world's largest economy makes sense. On an income level, over the past 10 years more than twice as many US companies have increased their dividend compared to the UK. In addition, since January 1990 the highest yielding companies have produced the best returns. Many investors tend to invest for an upturn which the US has traditionally led.

It is also true to say that, historically, markets tend to bottom out well before the end of a recession and so investors intending to wait for the recession to end may well miss out on sharp market upturns. As Warren Buffet put it in October this year: "The market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over."

Berens continued: "In a low interest rate environment, this fund's emphasis on large and mid-cap value stocks that deliver income could be particularly appropriate. The income component of total returns in the US has also made a significant impact. The power of income reinvested since 1989 has greatly outpaced distributed income. And as US companies increase their dividends and focus on total returns this can provide an attractive regular income stream. We're delighted to offer UK investors the first US equity income product to pay this level of dividend."