A solid track record of performance – JPMorgan Global Growth and Income

JGGI has established a solid track record of performance…by Jean-Baptiste Andrieux

This trust has been awarded a rating by Kepler Trust Intelligence for income… Find out more

Overview

JPMorgan Global Growth & Income (JGGI) offers investors a Portfolio of 50 to 90 stocks, aiming to exhibit superior earnings quality and faster earnings growth, while trading at valuations in line with the broader market. This is an approach that has worked well over the past five years, with JGGI comfortably outperforming its benchmark (see Performance section).

Unlike a traditional equity income strategy, JGGI funds its Dividend through a combination of the income generated by its underlying holdings and its capital reserves, with the aim of paying an annual dividend of at least 4% of the NAV as at the end of the trust’s previous financial year. For the current financial year, the board announced its intention to pay a total dividend of 23p per share, representing a 0.9% year-on-year increase and resulting in a prospective yield of c. 4%.

Since the start of the year, managers Helge Skibeli, Tim Woodhouse and James Cook have taken advantage of market volatility, particularly induced by concerns around potential trade tariffs, to add to names they believe have been unduly punished. One such example is Microsoft, which experienced a sell-off earlier this year and was, in the team’s view, trading at attractive valuations. They see long-term growth potential in the company, especially through its cloud computing business. It is also worth noting that Tim will step down from JGGI’s Management team at the end of September to transition into a new role within JPMorgan Asset Management. His replacement will be announced in due course.

The board has a long-term policy of buying back shares with the aim of maintaining an average Discount of 5% or less, although recent buybacks have in reality been around a 2% discount level. At the time of writing, JGGI was trading at a small discount of 1%, but the trust has traded at an average premium of 1.3% over the past five years.

Analyst’s View

In our view, JGGI makes effective use of the investment trust structure, funding its dividend from a combination of capital reserves and the income generated by its underlying holdings. This gives the trust the flexibility to invest in stocks with greater potential for capital appreciation that may not be accessible to conventional equity income strategies, as these companies tend to offer low or no dividend yield. As such, we would argue that JGGI offers a differentiated equity income strategy.

JGGI’s approach—which emphasises superior earnings quality, higher earnings growth, and valuation discipline—has delivered strong returns over the past five years, comfortably outperforming its benchmark. Notably, the trust has outperformed its benchmark in every completed calendar year since 2019, reflecting the consistency of the approach. That said, performance has faced headwinds over the past 12 months, with the team believing that the market has excessively rewarded some stocks for their earnings growth in 2024, while overly penalising companies seen as sensitive to trade tensions this year. In their view, this has led to dislocations that should provide fertile ground for long-term alpha generation.

In addition, JGGI has been a successful consolidator, having absorbed the assets of four other investment trusts since 2022. As a result, it is now the largest constituent of the AIC Global Equity Income sector by both market capitalisation and assets, giving the trust significant scale. As such, the trust should be liquid enough to meet the requirements of a broad range of investors, while these combinations have reduced competition for capital within the sector. Finally, JGGI also benefits from a competitive advantage thanks to its ongoing charge of 0.43%, making the trust the most cost-efficient strategy in the AIC Global Equity Income sector.

Bull

• Ability to pay dividends from capital provides greater flexibility than traditional equity income strategies
• Strong track record of consistent outperformance of the benchmark
• Several combinations with other investment trusts have made JGGI the largest constituent of its sector

Bear

• Dividend may experience some volatility in tandem with NAV
• The trust has historically been more volatile than the peer group
• High correlation to global indices may limit diversification benefits

See the full research on JGGI here >

_Disclaimer

_{Disclosure – Non-Independent Marketing Communication}

_{This is a non-independent marketing communication commissioned by JPMorgan Global Growth & Income (JGGI). The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.}