Aligned with long-term growth trends: JPMorgan China Growth & Income

JPMorgan China Growth & Income (JCGI) is co-managed by Rebecca Jiang and Li Tan, and advised by Howard Wang, experienced investors with deep knowledge of the Greater China region. They adopt a growth-oriented, bottom-up approach, seeking high-quality companies capable of delivering sustainable, above-market earnings growth over time, with particular emphasis on profitability, durability, and long-term relevance. Their focus is on businesses aligned with key structural trends in China, such as its pursuit of technological innovation, rising healthcare demand, and greater self-sufficiency in key areas of growth, like AI.

This disciplined strategy has shaped a Portfolio anchored in domestic-facing businesses and innovative growth names, resulting in overweight positions in sectors like technology, industrials and consumer discretionary. In contrast, the managers tend to avoid value-led, SOE-heavy sectors such as financials and energy, parts of the market they believe lack structural growth potential and offer weaker governance and limited forecasting visibility.

JCGI’s style bias has supported long-term returns, with the trust outperforming the MSCI China Index over the past decade (see Performance). However, it has also proven a headwind during periods of sharp sentiment shifts or when value companies outperform, both factors occurring in recent years, contributing to JCGI lagging the index over one and five years.

Whilst sentiment towards China remains fragile, the managers remain optimistic about its long-term alpha opportunities. Recent portfolio activity reflects this conviction, with additions like Haidilao and Kuaishou Technology, where valuations have been compressed despite resilient fundamentals and strong alignment with China’s long-term growth themes.

At the time of writing, the trust trades at a 10.7% Discount, wider than its five-year average of 6.8%.

Investor sentiment towards China remains cautious, weighed down by persistent macro uncertainty, geopolitical tensions, and the memory of past regulatory shocks. Yet we believe these concerns, whilst valid, continue to obscure rather than invalidate the long-term investment case. Domestic growth drivers: targeted stimulus, gradual income growth, innovation in high-end technology and manufacturing, and a large household savings base, remain intact and, supported by fiscal and policy backing, could help power a consumption-led recovery.

Against this backdrop, Chinese equity valuations, particularly among high-quality growth names, have fallen to historic lows. Whilst some companies are cheap for good reason, many continue to exhibit strong fundamentals and operational resilience. For investors willing to look beyond short-term noise, we believe the long-term case for selective exposure remains compelling.

JCGI offers access to this opportunity set through a high-conviction portfolio focussed on quality, earnings durability, and alignment with long-term policy priorities such as AI, tech independence, and domestic consumption. Whilst this approach has delivered strong long-term results, the managers’ growth bias and focus on fundamentals won’t always shield against sharp sentiment swings, a challenge seen in recent years.

The trust’s 4%-of-NAV Dividend adds to the attractions, offering a differentiated stream relative to traditional income strategies. Whilst payouts will decline if NAV falls, as seen recently, the structure enables income delivery without compromising the trust’s growth-focussed mandate.

Periods of valuation dislocations have often proven fertile ground for patient investors. With its current discount wider than the five-year average and a diversified portfolio aligned with China’s long-term growth drivers, we believe JCGI remains a compelling option to access the region’s structural upside, provided investors are comfortable with the volatility that may accompany the journey.