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Behavioral Finance Jp Morgan

In: Business and Management

Submitted By mvryk123
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Answer 1:
How does JP Morgan’s Asset Management group make profit? The JP Morgan Asset Management group (“JP Morgan” or “the group”) earns profits by charging direct and indirect fees including commissions on the total assets under management (“AUM”) of $847 bn . The group offers a full range of financial products comprising U.S., non-U.S. and global mutual funds/investment management, across cash management, equity, fixed income segments as well as alternative asset classes, such as private equity and real estate. It has a worldwide client base of institutional and retail clients, including governments, corporations, endowments, foundations and individuals.
The equities segment accounts for $370 bn1 AUM spread over a mix of qualitative and quantitative approaches including $76 bn in Behavioral Finance (“BF”) strategies. Hence, BF represents 10% of the AUM of the group and is growing at a fast pace. In the United States, the BF AUM has increased from $100m to $20bn within a space of three years.
How do they compete in managing and marketing retail mutual funds? JP Morgan competes with other retail funds by introducing investment strategies to retail investors that are not widely present in the retail mutual fund industry and having an effective and strong marketing. It was among the first global funds to innovate and introduce a retail mutual fund based on behavioral biases by drawing on the relatively recent body of academic findings in BF. The JP Morgan marketing programme is designed to educate brokers to help clients avoid common human tendencies that affect the ability to pick stocks and understand market prices. By being sensitive to biases like overconfidence, loss aversion, recency and anchoring the team establishes a strong basis to develop trust and relationships with clients and customers.
What is their strategy? JP Morgan BF funds

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