JPMorgan Growth Advantage Fund overview

The JPMorgan Growth Advantage Fund (VHIAX) invests across market caps, although it retains the flexibility focus on one particular segment at a given time. The fund can invest in derivatives as substitutes for securities it wants to invest in. Its focus is on companies that have strong earnings growth potential.

Sector Composition of JPMorgan Growth Advantage Fund in YTD 2016

Its investment process includes research, valuation, and stock selection to short list those companies whose growth rate is above average or those that have a potential for above-average growth. The fund notes that the adviser finds companies “with leading competitive positions, predictable and durable business models and management that can achieve sustained growth” as attractive.

Mohawk Industries (MHK), ULTA Salon, Cosmetics & Fragrance (ULTA), Tyson Foods (TSN), Fortune Brands Home & Security (FBHS), and PPG Industries (PPG) were among the fund’s 87 holdings at the end of July 2016. In July, the fund was managing $6.2 billion in assets.

Portfolio changes in the JPMorgan Growth Advantage Fund

Information technology is VHIAX’s top sectoral holding, forming 31% of the portfolio. A distant second is the consumer discretionary sector, followed by the healthcare sector. Industrials is the only other sector that forms over a tenth of the fund’s assets. The fund is not invested in the telecom services and utilities sectors.

Compared to the Russell 3000 Growth Index, the fund is overweight in the information technology, materials, energy, financials, and industrials sectors. Meanwhile, it is underweight in the consumer discretionary and consumer staples sectors.

We’ve looked at the quarterly portfolios of VHIAX for the past three years through June 2016. Among the consumer-focused sectors, VHIAX is largely invested only in the discretionary sector. After 2Q13, the staples sector was completely eliminated from the portfolio. Although it was reintroduced in 3Q14, allocation to the sector remains at just 2.3% of net assets. Materials and tech stocks have seen a large increase in allocation, while energy and financials have seen a decrease.

How has the JPMorgan Growth Advantage Fund – Class A (VHIAX) fared in YTD 2016, and what has contributed to its performance? Let’s look at that in the next article.

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