JP Morgan considers EMC to be undervalued:
No gains but high returns
Tax managed fund beats its benchmark
By Craig Tolliver, CBS MarketWatch
Last Update: 4:45 PM ET Dec 21, 1998 Mutual Fund Center
True to its name, the J.P. Morgan Tax Aware U.S. Equity Fund (JPTAX) announced that for the second year running there will be no capital gains distribution. The fund's strategy is to sell securities when anticipated performance benefits justifies the resulting tax liability. Gains realized in one security may be offset by selling another at a capital loss. The impact of capital gains taxes, as well as risks and returns, are calculated utilizing a proprietary tax-sensitive optimization model. In the top 10 percent of the growth and income peer group, its one-year return on Friday of 29 percent beat the S&P 500 Index ($SPX) return of 26 percent. "The fund has a tax efficiency ratio of 99 percent, which means that investors get to keep more of their return. More and more investors are now realizing that after-tax return is important, and they do not have to sacrifice return in order to gain tax efficiency," said fund manager Terry Banet in a press release.
The $90 million Tax Aware fund invests primarily in large- and medium-capitalization U.S. companies. The portfolio is made up of roughly 90 stocks that are considered undervalued by J.P. Morgan's 25 U.S. equity analysts. As of Sep. 30, top holdings included Mobil (MOB), EMC Corp. (EMC), MCI WorldCom (WCOM) and SBC Communications (SBC). There are over 40 mutual funds in the J.P. Morgan (JPM) family amounting to nearly $20 billion in assets.
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