WEBVTT

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Hi, my name is Fiona Harris.

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I'm a US equities
specialist at JP Morgan

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and I've been with the
firm for over 25 years.

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My role is a very important one.

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Consider me the voice
and face of the trust.

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As investors, you really want to
pay for your portfolio managers

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to manage your money.

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But we also recognize
YOU also want

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to be able to interact
with the investment team.

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you want to know about their
process, how the team is built,

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how they think about investing,
but also have updates

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on performance and
portfolio positioning.

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The investment
philosophy and process

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we employ managing this trust
is very much focused on stocks

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as the building blocks.

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It's a bottom-up process.

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What does that mean for you?

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It means we're not
looking at macro.

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We're not looking at economic
data or interest rates

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and then determining
where we want to invest.

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What we're doing
is we're looking

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for good companies,
companies that we perceive

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to have competitive advantages,
irrespective of where

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they exist within the market.

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And then we're looking
to own these companies

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for the long term.

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For that strong
competitive advantage,

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you want to know why you go back
to a company for their product

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and service year in, year out.

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So think about a truly
innovative company, a company

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that adapts their product
time and again so it's useful,

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that it's purposeful.

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Or a company that has fantastic
customer service so they're

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a pleasure to deal with.

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Our companies are often the
market leaders in their space

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because they have
those attributes.

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Some words that many of you will
have heard in the marketplace

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is ESG, Environmental,
Social and Governance issues.

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They're at the forefront of
a lot of newspaper articles.

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When we think about ES &G,
we really break them out

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individually.

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For G, good governance.

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Because we invest in
high quality companies,

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we also want high
quality management teams,

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management teams that
do the right thing, that

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invest directly in the
companies themselves,

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that think about
their employees, that

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think about the products
or services they're

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bringing to marketplace.

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They're not using
aggressive accounting,

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making acquisitions
that make no sense.

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For environmental, we want to
know the impact a company can

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have on its environment.

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Is it subject to
greenhouse gases?

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Is it subject to resources
that they're using?

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And so that's really important,
because environmental issues

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can impact a company's long-term
earnings and cash flow streams.

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And the same with social issues.

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We want to know if
these companies are

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good investors in
terms of the people

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that they have on
their payroll, but also

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in the communities
where they're involved.

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And being a good social
company can reap benefits

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over the long term.

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The US markets
over the long term

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have truly rewarded investors.

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There's a lot of
reasons for that.

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Companies have generated
great margins, great sales.

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It's been a great growth story.

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But also, the US
compared to other markets

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is actually the
highest-quality market.

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So even in times where
there's fear about the US

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and a recession, or
fear and other markets

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there's typically
a flight to safety

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and US equities tend
to reward investors

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over those time periods.

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So it's a large market with very
attractive long-term returns,

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but also it's a
high-quality market.

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And that makes it, for our
mind, a compelling long-term

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investment.

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We are very disciplined in the
execution of our investment

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process.

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We're always looking for those
quality companies, quality

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management teams, and
when we find them,

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we're looking to buy them when
they're trading at a discount

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to their intrinsic value,
when they're cheaper than they

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should be for whatever reason.

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Now that discipline
is really important.

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Irrespective
whether the market's

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trading at a high valuation
or a low valuation,

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we're looking for
those individual stocks

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that can make compelling
investments for inclusion.

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When the market goes
on sale, we usually

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get excited because a
lot of our favorite names

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that we haven't been able
to add to the portfolio

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may be on sale as well.

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If the fundamentals
are still good,

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compelling investment
decisions can be made.

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And you can buy those stocks at
really attractive valuations.

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When we look to the US today,
there's a lot of uncertainty.

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There's a lot of issues
we're all dealing with--

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inflation, stronger dollar,
higher interest rates.

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And that, of course, resonates
both in consumer sentiment

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and business sentiment.

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But at the end of the
day, we're looking

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for those companies that can
navigate the cycle irrespective

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of where we are.

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When we look at the outlook
for US smaller companies,

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you really have to
think long term.

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Long term means different
things to different people.

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So we have to think about
over a full market cycle.

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What we have to do is find
those compelling ideas

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that we can invest
in for the long term.

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So we think the
outlook looks good,

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irrespective of what
happens with the economy

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over that short term.

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When we're looking for
a compelling investment

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ideas for inclusion
in the portfolio,

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the attributes that we
look for don't change.

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It's always looking for quality
companies, great management

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teams, companies with
consistency of earnings,

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but also companies today
that can push through higher

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prices with higher inflation.

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While we may not be
able to find ideas

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across all the
sectors in the market,

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with a great research
team we can definitely

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find individual
gems for inclusion.

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When it comes to
portfolio holdings,

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we typically hold
between 90 and 100 names.

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May seem like a lot, but also
we can manage risk that way

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by having a number of
names in the portfolio.

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So no position size is above 3%.

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That gives us enough active
exposure but also to help

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manage risk as well.

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As US small cap investors, of
course we love our asset class

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and we think it's
the best out there.

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But also, when you're
looking at potential returns,

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we do feel you should get
good reward from investing

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in your small caps.

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What we're trying to do is
find those truly innovative

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companies, those
high-quality companies

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that we can own for the
long term in the portfolio.

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So it's not about a sector,
it's not about economics,

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it's not about inflation.

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It's finding good
businesses that we

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can invest in for the long term
that will hopefully reward us.

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[MUSIC PLAYING]

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When we're looking for
Investment opportunities,

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but also when we're reviewing
our holdings in the portfolio,

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we really don't think
about the macro.

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We're not macro strategists.

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We're not going to be the
best at determining interest

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rates or inflation, but
what we can be the best at

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is finding those
great ideas that we

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can own for the long
term in the portfolio.

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So stocks are our building
blocks to hopefully deliver

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great long-term performance.

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When we think about us smaller
companies, those great ideas

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for inclusion in
the portfolio, we're

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thinking about investing
in the long term.

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Think about three,
five, 10 years.

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And in fact there's
names that we've

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held for even longer
in the portfolio.

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So for us, it's not
about the opportunity set

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because of market
environments and investing

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for the short term.

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It's about the opportunity
set for investing over

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the long term in
individual names.

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