The JP Morgan Global Growth & Income investment fund is in pretty good shape. In fact, compared to many competitors, it is in poor health. The £2.3bn stock market-listed fund has a set of strong performance figures (both short and long term) built around a clear strategy to identify the best investment ideas from around the world.
It also pays shareholders an income linked to the growth of the trust’s assets. In simple terms, if assets increase in value, shareholders see their dividends increase.
For the current fiscal year, which will end at the end of June, it will pay quarterly dividends of 4.61 per share, 8.5 percent more than the previous year (two have already been paid). It equates to an annual dividend of 3.2 per cent and the shares are trading just above £5.30. Payments come from a combination of portfolio income and the use of the trust’s income and capital reserves.
These factors – performance, investment clarity and growing income – have combined to make this JP Morgan flagship trust something of a must-have investment. As a result, demand for its shares from a mix of private investors and wealth managers is such that they are trading just above the value of the trust’s assets – at a so-called premium.
This healthy position has persuaded the trust’s board to expand the fund by £40m through a share placement and a retail offering. The placement is expected to be taken up by wealth managers keen to attract clients, while the retail offering will attract a mix of new and existing private investors. The offer closes on Tuesday.
“We are managing a portfolio that adapts to any weather conditions,” says James Cook, one of three managers overseeing the fund’s portfolio. ‘It is fulfilled through economic, financial and market cycles. It is not tied to any particular investment theme or style, for example, growth or value investing. The trust’s main objective is to find the best investments from around the world.’
The numbers back up what Cook says. Over the last five discrete one-year periods, the trust has generated total returns of 17.1 (in the year to February 2024), 5.8, 18.9, 15.9 and 20.3 per cent. The triumvirate of fund managers is supported by around 80 in-house analysts who scour the world looking for companies that might fit into the all-weather fund’s portfolio. They currently have about 2,500 stocks on their radar, but only 52 are in the fund.
The trust’s portfolio is skewed toward the United States: 65 percent of assets are located in that country and eight of the top ten holdings are large American companies.
Although he holds some of the “magnificent seven” US stocks (Amazon, Meta, Microsoft and Nvidia), he avoids Alphabet, Apple and Tesla because there are better alternatives.
The four it has are liked mainly because they are at the forefront of the ongoing Artificial Intelligence (AI) revolution.
Other stocks of interest to managers include Swedish car and truck maker Volvo and semiconductor giants Taiwan Semiconductor Manufacturing Company and Netherlands-based ASML.
Cook says the expansion of the trust will not change the composition of the portfolio with the cash raised used in the 52 shares.
While Cook says companies’ profit margins are likely to decline in the coming months as demand in the global economy wanes, he still believes there are opportunities for astute managers to generate returns by identifying strong companies with attractive valuations.
The fund’s stock ticker is JGGI and its identification code BYMKY69. Ongoing fund charges are competitive at 0.5 per cent.