Fund Manager Radar_ Playing defense. Fri Feb 28 2025

Summary of J.P. Morgan Fund Manager Radar - February 2025 Industry Overview - The report focuses on the Australian equity market, particularly the performance and positioning of various sectors and stocks within the ASX 200 index. Key Points Sector Performance and Positioning - Defensive Sector Inflows: The average Australian active portfolio has shifted towards defensive sectors, particularly Communications, Healthcare, Staples, and Utilities, which saw an all-time high allocation at the end of January, increasing by +490 basis points [6][8][10]. - Cyclical Sectors: Fund managers are optimistic about cyclical sectors due to anticipated RBA rate cuts, with a noted shift towards resources, construction materials, and consumer discretionary sectors [22][23][25]. - Financials and REITs: These sectors remain deeply underweighted, with Financials showing a significant decline of -8.29% in active weight [9][12][46]. Love Index Insights - Top Movers: EVN has become the most loved stock, surpassing MPL, with 8 positive tier movers and 4 negative movers in January [27][28]. - Performance Post-Publication: Positive movers in the Love Index have outperformed negative movers by 41 basis points and 122 basis points over three and six months post-publication, respectively [17][19]. Manager Sentiment - Rate Cuts: Fund managers expect the RBA to commence an easing cycle in February, with a total of 75 basis points expected to be cut in 2025 [23][25]. - US Tariffs: There is caution regarding the potential impact of US tariffs, with concerns about timing and implications for global trade [24][25]. - Reporting Season Volatility: Anticipation of heightened volatility during the upcoming reporting season, driven by elevated starting valuations and geopolitical risks [25][26]. Sector Allocation Changes - Monthly Changes: In January, managers increased their allocation to Financials, Materials, and Staples while reducing their weighting in Industrials, Discretionary, and Tech [10][12][12]. - Yearly Changes: Over the past year, there has been an increase in Materials and Staples exposure, while Financials and Discretionary have seen reductions [12][13]. Stock-Specific Insights - Performance of Selected Stocks: - Positive movers include COH (+5.7%), EVN (+13.9%), and MQG (+4.1%) [5]. - Negative movers include ORG (-8.7%) and CAR (+8.0%) [5]. Conclusion - The report indicates a defensive positioning among fund managers in the Australian equity market, with a focus on cyclical sectors due to expected rate cuts. The Love Index provides insights into stock popularity, while caution remains regarding external factors such as US tariffs and upcoming corporate earnings volatility. This summary encapsulates the critical insights from the J.P. Morgan Fund Manager Radar for February 2025, highlighting sector trends, manager sentiment, and stock performance within the Australian market.