The strategy seeks companies which can grow faster than their peers on a sustainable basis yet whose stocks trade at reasonable valuations and should outperform the market over a market cycle. Our analysis therefore focuses on companies with growth opportunities better than their peers, a clear strategy to deliver that growth, and the potential to surpass current market expectations. However, we recognize that the principal risk in trying to identify growth stocks is that the valuation may already reflect future growth potential. We, therefore, emphasize a disciplined approach, which pays as much attention to valuations as it does to growth expectations.
We seek to leverage all the resources available to the firm—the local investors that comprise J.P. Morgan’s regional asset management teams, a dedicated team of global sector specialists and experienced portfolio managers—to drive consistently strong stock selection and risk-controlled portfolio construction.
We believe that our competitive edge stems from our proprietary information advantage. This is based on our substantial commitment to building and maintaining a seasoned team of in-house research analysts. This commitment to research is the most distinctive element in our investment process and serves as the primary driving force behind the value we seek to add.
Investment ProcessOur ideas come from three places—investment professionals, global sector specialists and portfolio managers:
200 investment professionals
These individuals comprise our regional asset management teams who manage regional equity portfolios, conducting research on companies and generating local market insights in an effort to identify the highest conviction stocks within their region.
Global sector specialists
Leveraging the insights and stock ideas generated by our regional investment teams, our team of global sector specialists seeks to identify global “industry winners,” pinpointing stocks that combine strong growth and quality characteristics with attractive valuations.
Each global sector specialist ranks the stocks within their sector on a scale from A to D, with "A" representing the highest conviction buy ideas and "D" indicating a strongly negative view on a stock. These rankings are based on a variety of factors including the information gathered from the regional investment professionals and the global sector specialists’ own analyses of companies, industry dynamics, and valuations.
The strategy's potential for growth discipline lies at the heart of our stock level analysis. The primary focus is on identifying companies whose earnings are expected to grow faster than their peers and which exhibit characteristics that we believe will enable them to sustain that superior growth. These generally include a strong management team, highly competitive brands or products, a dominant market position, strong profitability and a sound balance sheet. A stock should also preferably have potential for a valuation re-rating, (multiple expansion). The portfolio management team maintains a regular dialogue with all sector specialists to ensure that this focus on strong growth characteristics and potential valuation upside drives their analysis.
The International Growth strategy is managed by an experienced team of investment professionals who, over the years, have accumulated knowledge of companies worldwide. From time to time, the portfolio managers may come across stock ideas that they may find interesting and will generally ask the global sector specialists to conduct additional research and consult with the relevant regional team.
Portfolio construction is the responsibility of the portfolio management team, led by Shane Duffy. A model portfolio is constructed, which serves as the basis for all our international growth accounts. The aim is to diversify sector, country, and other macro risks, delivering alpha primarily through active stock selection, which reflects the best thinking of our global sector specialists.