A portfolio manager for JPMorgan’s $ 2.7 trillion asset management arm, which has surpassed 90% of peers in the past decade, explains why he isn’t panicking about Omicron or the inflation – and which 4 sectors …

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Phil Camporeale is a high performing portfolio manager who manages the JPMorgan Global Allocation fund.
  • Phil Camporeale, a portfolio manager at JP Morgan, has surpassed 90% of his peers in the past decade.
  • Markets have been rough lately, but Camporeale remains in equities despite Omicron and inflation.
  • Here are the four sectors every investor is expected to be exposed to in 2022.

Trying to beat the performance of the stock market can be a wild ride. In fact, even professional money managers only have a 12% chance of doing this – about the same chance as correctly guessing which way a two-sided coin will land three times in a row.

Phil Camporeale, a multi-asset portfolio manager at JPMorgan who manages the company’s Global Allocation Fund (GAOSX), defies those odds. It has outperformed the S&P 500 – and 90% of its peers – in the past 10 years, according to Morningstar.

His secret to success? An odd knack for knowing when to lean on stocks and when to fade them, which he described as “risk on, risk off, risk in between” in a recent interview with Insider.

The obvious follow-up question, then, is in which direction the exceptional manager is looking ahead of 2022. Camporeale said he is maintaining his risk-driven approach by remaining overweight in US equities – a bet that has largely rewarded him for these. last years.

“The main driver of our success, even though we compete in a Morningstar Global category, has been our allocation to US equity markets, particularly the S&P 500,” said Camporeale.

Gains, losses and lessons from a top portfolio manager

Camporeale said its Global Allocation Fund has achieved an alpha, or excess return to the market, every year since 2011, except 2019. After its 16.3% return that year was lower With the 18.5% gain in the Morningstar World Index, Camporeale rebounded in style and placed in the top 9% of funds, a performance he is particularly proud of.

“2020 has been an incredibly volatile year, as you know,” Camporeale said. “Being able to manage the risk in the first quarter, but then really having the will, the ability and the courage to take the risk, really at the end of March and April, was important. And then keep the risk in November, which was the election, a second wave of the virus without a vaccine, and then finally the vaccine news came on November 9. “

This year has been difficult for the Camporeale fund again, although it is not over yet. One month to go, JPMorgan’s Global Allocation Fund is up 6.6%, slightly behind the 7.2% gain in the Morningstar World Index.

The fund got off to a rocky start until 2021 due to a misplaced bet on emerging market equities, Camporeale said. He believed that a rebound in global growth and continued dollar weakness would trigger a long-awaited rally in emerging market equities, the fund manager told Insider last December.

That thesis began to unfold a week before 2021, Camporeale said, because of a pair of catalysts that would push up the U.S. economy. The Democrats’ second-round victory in Georgia’s Senate was followed by a $ 1.9 trillion stimulus package, and the growth also came from what Camporeale called an “incredibly effective” vaccine rollout. Emerging market equities couldn’t compete with the good news and spent the year lagging their US counterparts by the biggest gap in 20 years.

“Which led to an exceptional crisis in the United States during the first and second quarters of this year,” Camporeale said. “And when you have American exceptionalism, what usually happens is the dollar strengthens and trades higher. This is exactly what happened in the first trimester. This put particular pressure on the MS.

Camporeale said he quickly moved away from his misplaced call and ditched his fund’s overweight stance in emerging markets equities at the end of the first quarter. Although currently slightly underweight emerging markets, Camporeale is glued to the Chinese regulatory environment and other signs of a possible recovery in the space. Nailing emerging market trade will be key to outperforming in 2022, he said.

“We have to make this next exchange a success,” Camporeale said. “We cannot be underweight this index.”

Where to invest in 2022

Stocks have been through hell for the past three years, but the S&P 500 has returned at least 16% a year during that time. Volatility has climbed 61% since Thanksgiving as the Omicron variant threatens to slow global growth and it becomes more likely that the Federal Reserve will have to end its supportive monetary policy abruptly to keep inflation from ramping up.

Many investors are no doubt thinking of bailing out stocks. But that’s why they probably haven’t matched Camporeale’s performance over the past decade. Stay in inventory, he says.

The Omicron variant and higher inflation both deserve close watch, Camporeale said, but neither is worth overreacting. It’s too early to tell how serious Omicron is, the fund manager said, noting that the S&P 500 rose further over the summer as the Delta variant has spread like wildfire. And while Camporeale sees inflation skyrocket at least until mid-2022, he believes the Fed has not made a policy error and is “still operating from a position of strength.”

Camporeale’s investment strategy for 2022 is as follows: well-diversified portfolio stocks that weigh heavily on US names as its economy remains warm, targets stocks in economically sensitive countries value-driven sectors, and manage the risk of inflation by holding certain basic products.

In Camporeale’s eyes, four sectors stand out: Finance, Energy, Industrial, and Technology. The top three will benefit from a thriving economy, and the latter is a staple in any portfolio as it includes some of the biggest and best companies in the world. Tech names offer quality, meaning high and stable income, and protection in case the virus spreads further.


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