October 02, 2015

More on the JPMorgan Episode

This post is further to my earlier post on this topic.  It is based on some newly observed information, that was missed earlier.  It does not contradict the key points in that post: it sheds more light.

It appears that JPMorgan Mutual Fund has been exceptionally transparent in disclosing its scheme portfolios, month after month.  As far as I can make out, each month, there are three sets of documents released on their website related to disclosure of scheme portfolios.  There is the fact sheet which, among other things, carries details of the portfolios of all their schemes.  Then, there is a series of one pagers with a brief snapshot of each scheme’s portfolio.  Both of these documents are, more or less, in line with industry-wide disclosures.  In addition, there is a third document that is more detailed, and which, to the best of my information, most fund houses do not disclose on their websites.  This is a portfolio disclosure on the lines of the mandatory half-yearly portfolio disclosures, and it specifically marks out the illiquid securities in each scheme’s portfolio (see here).

What this means is that the precise information on the nature and extent of illiquid securities was available on the fund house’s website, month after month.  Sure, just as I missed seeing this, so could have anyone else.  But it begs the question of the responsibility of those who recommended JPMI Short Term Income Fund- both advisors and researchers- to be familiar with such publicly disclosed information.  At the very least, it would seem to me that if someone had missed this information yet made enquiries of the fund house (based on the evidence of concentration risk from the more common portfolio disclosures), the fund house would have likely been open in sharing that information.

To be clear: my observation in the earlier post that the fund house was playing with fire, remains.  This information gives me even less reason to feel for DIY investors who stayed put in JPMI Short Term Income Fund.  It also makes me question, even more strongly, the credentials of advisors and researchers who recommended this scheme.

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