Graduates should expect to work 12-hour days and 6 days a week to really master their jobs, says JPMorgan exec

Mary Callahan Erdoes of JPMorgan
Mary Callahan Erdoes of JPMorgan.

  • Graduates should expect to work 72-hour weeks, says JPMorgan wealth management CEO Mary Erdoes.
  • This will speed up their mastery of the craft, versus taking 5 years by working 8-hour days.
  • By doing 12-hour days, graduates can cut the process down to under 3 years.
  • See more stories on Insider’s business page.

Graduate wealth management analysts should expect to work 72 hour weeks – and they’ll be better trained for it – according to a senior JPMorgan executive.

Mary Callahan Erdoes, the CEO of JP Morgan Chase’s Asset and Wealth Management division, was speaking during an episode of Bloomberg’s Wealth with David Rubenstein.

Erdoes said that working longer hours will help graduate analysts learn their craft more quickly.

Based on the idea that it takes roughly 10,000 hours to gain “base-level mastery” of something, it’s going to take around five years if someone works eight-hour days, five days a week, said Erdoes.

“On Wall Street, it’s more like 12 hours a day, six days a week. That cuts you down to about two-and-a-half years before you become mastered in something.”

Once a graduate has that experience under their belt – across different areas of the wealth management division – they be sorted into a specialized team, based on what they’re best at, said Erdoes.

The concept of the ‘10,000-hour rule’, which was made popular by the sociologist Malcolm Gladwell, is disputed by some.

Erdoes joined the bank from Meredith, Martin & Kaye in 1996, and took over the asset management arm in 2009.

Alongside accounts of her earlier career and first forays into wealth management – as a six year old, accounting her grandma’s checkbook – Erdoes gave insight into the “intense training” that graduate analysts can expect during their three year training.

Erdoes describes each day as a “constant education” and revealed that each day starts with an 8am meeting.

“I call it a mini university. It’s not just about what you’ve read in the newspapers as to what happened overnight, it’s about understanding how all of those components fit together within a client’s portfolio,” said Erdoes.

“You’re synthesizing all that information every morning and then you’re going out and figuring how to apply it to each situation.”

Wealth managers provide advisory and other financial services to clients – typically about how to handle and which assets to invest in. 2,200 summer interns have already joined JPMorgan this year, and Erdoes said that 3,600 analysts will have started by September.

Wall Street has been under fire for its work culture

Financial services is among the industries under fire for its culture of long hours.

In March, junior bankers at fellow Wall Street bank Goldman Sachs issued executives with an internal pitch deck describing the “inhumane conditions” they felt subjected to. The bank subsequently reviewed its formal working hours in response.

In 2013, an intern at Bank of America Merrill Lynch’s London office died of a seizure. While it wasn’t conclusive, an inquest concluded that overwork could have contributed to 21-year-old Moritz Erhardt’s death.

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The rotation into value stocks will get a new lease of life as the US economy booms, JPMorgan strategist says

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The US economy is booming as Americans spend built-up savings.

  • The rotation into value stocks should pick up pace again as the US economy roars, a JPMorgan strategist said.
  • Hugh Gimber said Americans with built-up savings should benefit banks and consumer-focused companies.
  • The so-called reflation trade has paused in recent days after the Fed appeared to shift its stance.
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The rotation into so-called value stocks in the US has further to run as rapid economic growth pushes up bond yields, a JPMorgan strategist has said, despite signs that the trade has cooled in recent days.

Hugh Gimber, JPMorgan Asset Management’s global market strategist, told Insider that companies in the financial and consumer-focused sectors stand to gain, thanks to Americans unleashing pent-up savings and wages rising as the economy bounces back.

“I do expect US value to outperform US growth,” Gimber said. “It’s about the laggards from last year having more scope to catch up to the rest of the pack because of the environment that we’re in.”

The first half of 2021 in financial markets has been marked by a “reflation trade“. It has seen investors pivot away from the fast-growing tech stocks that did so well in 2020, toward sectors such as energy and financials that are likely to perform better as growth and inflation pick up.

However, recent signs that the US Federal Reserve may be more concerned about inflation than previously thought have knocked the trade’s popularity. The tech-heavy Nasdaq index is up more than 5% over the last month, while the more industry-heavy Dow Jones is down around 1%.

Yet Gimber said he expects strong growth and higher inflation to push up bond yields in the second half of the year.

“You have consumers with pent-up demand, cash in their pockets, that can now get out and spend, driving a very strong outturn for growth.”

Higher market interest rates would likely make the earnings of so-called growth companies – whose full potential is often far in the future – look less attractive to investors.

The JPMorgan Asset Management strategist said rising wages would boost Americans’ spending power, benefitting companies in consumer-discretionary sectors such as luxury goods, vacations, and cars.

He said: “A healthy consumer tends to be helpful for financials, coupled with the latest news on buyback prospects for the financials and the rising yield environment, all of which bodes well for that sector.”

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Americans unleashing pent-up savings could drive up inflation and rattle parts of the market, JPMorgan’s chief strategist says

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Americans have built up savings during COVID that could be unleashed.

US consumers unleashing their pent-up savings in a huge wave of spending could drive up inflation and rattle some parts of the stock market, JPMorgan Asset Management’s chief strategist for Europe has said.

Karen Ward said in an online presentation this week that JPMorgan estimates Americans have built up extra savings worth around 8% of US GDP during the COVID-19 pandemic, when their spending options have been limited.

Ward, a former top economic advisor to the UK’s finance ministry, said she thought most of this would be unleashed in a spending spree. When combined with Joe Biden’s $1.9 trillion stimulus bill – worth around 9% of GDP – that is likely to push inflation higher, she said.

“I’m not talking about runaway inflation of the 70s,” she said. “But I just think the risks in my view are more skewed towards inflation averaging 3% over the next 10 years, rather than inflation averaging 1% over the next 10 years.”

Core personal consumption expenditure inflation, the Federal Reserve’s preferred measure, stood at an annualized 1.5% in January.

Ward said that a rise in inflation was likely to generate volatility in parts of the stock market as investors reacted to the new situation. She added that confusion around the Fed’s new tolerance of higher inflation and employment would also create uncertainty.

Economists expect the US economy to boom in 2021, following the worst contraction since World War II in 2020. Yet they are divided on what this means for price levels, which is a key question for markets, given the importance of inflation to assets’ values and returns.

Whether or not inflation rises persistently “is the big question that nobody knows the answer to,” said Nasdaq chief economist Phil Mackintosh.

Rising growth and inflation expectations have already pushed bond yields sharply higher, with investors demanding a bigger return to account for price rises.

The move up in yields shook many investors in February and March. The tech stocks that did so well during the pandemic fell sharply, as bonds and stocks that are set to do better from strong growth and inflation started to look more attractive.

Ward said she thought bond yields would rise further as inflation picked up, and would probably generate further volatility in some parts of the market on the way.

The JPMorgan strategist said the Fed’s new mandate to tolerate higher inflation and employment may also cause problems.

“Not only do they want to reach full employment, but they also want inclusive employment. So what exactly does that mean?” she said. “I think that has the potential to generate us some volatility.”

Yet, she said the global stock market as a whole was unlikely to be majorly troubled because stronger growth should support companies’ earnings.

Many analysts believe inflation will remain low, however, that is partly because unemployment is set to remain higher than it was before the crisis in the medium term.

The Fed itself has signaled it does not think inflation will be damaging, with chair Jerome Powell reiterating that message on Thursday.

Jan Hatzius, Goldman Sachs’ chief economist, predicted in a note on Monday that US inflation would remain “well below the Fed’s 2% target, consistent with an economy that remains well below full employment.”

He added: “All this has increased our confidence that Fed officials will be able to stay the course in exiting only very gradually from their highly accommodative stance.”

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BestInvest calls out the top 5 worst performing asset management firms, with Invesco taking pole position for the sixth time running

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the funds must have underperformed the benchmark by 5% or more over the entire three-year period of analysis to make the list.

  • BestInvest, an online investment platform, just released their twice-yearly “Spot the Dog” report.
  • The report analyses the worst-performing funds across different sectors.
  • These are the five firms that had the most assets under management in the list.
  • Visit the Business section of Insider for more stories.

Even the biggest names in asset management can get it wrong and BestInvest just called out some of the top losers.

In its twice-yearly ‘Spot the Dog’ report, the online investment service names and shames the top underperforming funds and firms, and Invesco has topped the list for the sixth time in a row.

“The top slot in Spot the Dog continues to be held by Invesco with 11 funds totalling £9.2 billion. Four of these funds are Tibetan Mastiff-sized beasts,” the report said.

However, the report, which doesn’t win any popularity contest among fund managers, does note that Invesco’s number of funds that made the list has fallen this time.

What is a ‘dog fund’?

So how does BestInvest identify the funds that fall into this somewhat cruel category using two filters?

First, it filters by fund universe to identify “those that have failed to beat the benchmark over three consecutive 12-month periods,” the report said.

The benchmark chosen by BestInvest is determined by the sector the fund, designating one that operates in an index that “represents the overall movements in the market that the fund operates in,” it said.

This highlights those that have consistently underperformed and allows the research to remove those that “may simply have had a short run of bad luck,” it added.

Secondly, the funds must have underperformed the benchmark by 5% or more over the entire three-year period of analysis.

The Kennel Club

These are the firms with the most assets under management, which made the list because of their “dog funds”:

1. Invesco

For the sixth time running, Invesco has landed the top “dog” spot, with 11 funds making the list, worth £9.2 billion in total. Admittedly, this is down from 13 funds valued at £11.4 billion from the last report.

Two of the firm’s funds were repeat offenders on the list: Invesco’s UK Equity High Income and UK Equity Income funds, delivering -21% and -19% respectively over a three year period compared to the benchmark.

But, in the firm’s defence these funds were only recently handed to new managers, “who are now tasked with turning them around,” the report said.

Moreover, Invesco has gone through a broad shakeup over the last year after the appointment of a new chief investment officer, Stephanie Butcher.

“This is clearly a work in progress,” the report added.

2. Jupiter

The UK-based firm Jupiter leapt up the rankings from ninth to second place in this report following its July 2020 acquisition of Merian Global Investors, making it “rescue home for two sizeable beasts,” the note said

The now enlarged group oversees 8 “dog funds”, totalling £4.1 billion of assets. The biggest of these is the Merian North American Equity fund, which has seen a -14% return in the last three years compared to the benchmark.

3. St. James Place

St James’s Place’s (SJP) in-house fund range has frequently “lurked near the top spot in the hall of shame” and sits in third position with four funds totalling £4 billion, the report said.

The number of SJP funds that made this edition has halved since the last with the SJP UK High Income fund, previously managed by fallen star Neil Woodford, escaping the shaming.

The SJP Global Smaller Companies fund was one of this edition’s biggest losers in the Global sector, coming fifth in that particular list and trailing the benchmark by -32%.

4. Schroders

Schroders took this edition’s fourth place after it number of funds to make the list rose to 11, with an increase of £4 billion in asset.

Three of the Schroder’s included are managed by its QEP team, the report highlight, who use a “systematic, data driven investment process.”

Both the Schroder European Recovery and Global Recovery funds – which target undervalued companies – made the list, underperforming the benchmark -22% and -33% respectively. These, and the firm’s income funds investing in the US, Europe and globally, struggled in the 2020 environment where ‘growth’ stocks significantly outperformed.

These growth sectors include technology and communications services which have been the biggest ‘COVID-winners’, like video-conferencing software Zoom and EV company Tesla.

Therefore, growth strategies largely left funds targeting undervalued companies or dividend-generating businesses lagging in the dust during 2020.

However, if the global economy recovers as most banks are forecasting, these ‘recovery’ or ‘value’ plays could catch-up, making significant gains.

Of note, the report excluded the £3.3 billion ‘dog fund’ managed by the firm in its joint venture with Lloyds Bank.

5. JPMorgan Asset Management

JPMorgan’s inclusion in the top five came down solely due to the JP Morgan US Equity Income fund with its huge  £3.2 billion in AUM, which fell -27% below the benchmark, the report said.

Unfortunately for JPMAM, the fund has been underweight technology stocks in a period when companies like FAANG and tech cult names like Tesla have been market leaders, as many tech companies do not pay dividends.

But, like Schroders, this could turn around if value sectors like Banks and energy – which are the main dividend payers – catch up on any economic recovery.

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