Morningstar

JPM Emerging Markets Equity A (acc) EUR

Analyst Report
Morningstar's Take
|11/03/2025
by Lena Tsymbaluk
J.P. Morgan announced that, starting March 19, 2025, John Citron has been appointed as a comanager for the JPM Emerging Markets strategy. We believe Citron’s appointment is a positive development, especially considering Sarah Dodson’s recent departure. His appointment supports succession planning and ensures continuity, given his extensive experience with the strategy. Citron has been with the GEM Fundamental team since 2017 and has served as a deputy manager for the JPM Emerging Markets investment trust since March 2021, making him well-acquainted with the approach.

In addition, the strategy will reopen to new investors starting March 31, 2025, after being soft-closed since May 2020 due to reaching its target capacity of USD 32 billion. This decision comes after significant redemptions in recent years caused by negative sentiment toward emerging markets and underperformance, resulting in a total AUM of USD 26 billion as of February 2025.

We do not expect any changes to the investment philosophy, and there are no changes to the People and Process pillar ratings.
 
The JPM Emerging Markets strategy’s highly experienced management team, the group’s extensive resources, and a well-codified investment process underpin our positive view. We reiterate the strategy’s People and Process ratings at High and Above Average, respectively.

The strategy has been led by Leon Eidelman, who has been the primary decision-maker since January 2015. He became comanager alongside the previous lead manager Austin Forey. Forey is head of the fundamental emerging-markets team at JPM and remains a backup here.

Eidelman and Forey work closely together and alongside the other managers on the emerging-markets fundamental team, Amit Mehta, John Citron, and Weiying Dong. Sarah Dodson and Komal Dhillon, two junior managers, were hired in mid-2022 to assist the team but left in the fourth quarter of 2024. Instead of hiring more junior portfolio managers, the team plans to bring on two analysts, with Jack Norris already having joined in the fourth quarter of 2024. Since Eidelman has always been the primary decision-maker, the departure of these two junior managers isn’t considered critical.

Management is further supported by the wider emerging-markets and Asia-Pacific equities team, which consists of more than 100 investment members. As part of an ongoing review of the China research initiative, David Gleeson was appointed the new head of China research in the first quarter of 2024. This led to several changes within the analyst team, including a few departures owing to realignment of research resources and performance reasons, as well as hiring two senior analysts.

While the core quality growth process remains unchanged, the EMAP team has made several adjustments to its strategic classification framework over the past two years, mainly focusing on refining analysts' models and forecasts. The team is now focusing on using top-down industry frameworks for long-term forecasts, tracking investment theses for better position sizing, and employing the artificial intelligence tool "Moneyball" to identify discrepancies between analysts' views and the market. We believe this should improve long-term outcomes without changing the fundamental nature of the strategy.

After strong performance from 2019 to the first half of 2021, the strategy faced challenges from the second half of 2021 to the end of 2024. The underperformance of high-quality, long-duration growth businesses during the period has been a style headwind for this quality-growth strategy. There have also been some stock-selection issues, particularly in China.

We take comfort that the team is taking steps to address the issues in China and will keep track of the implications and monitor the outcome of stock selection. The strategy's long-term record remains solid and ahead of all the yardsticks over Leon Eidelman's tenure from Jan. 1, 2015, through Feb. 29, 2025.
 
Morningstar Medalist Rating™A quality growth approach, where thoughtful process enhancements should improve outcomes.
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Morningstar Pillars
PeopleHigh
ParentAbove Average
ProcessAbove Average
 
Morningstar Medalist RatingMorningstar assigns the Medalist Rating to funds that are qualitatively and quantitatively assessed through manager research and algorithmic processes. The assessment turns on three key “pillars” – People, Process, and Parent – that yield an estimate of how well a fund will perform before fees but after adjusting for risk.
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