New trio energises trust with income-growth repositioning: JPMorgan Claverhouse

JPMorgan Claverhouse Investment Trust (JCH) aims to deliver a reliable and growing income stream alongside long-term capital growth from a portfolio of UK-listed equities. Following William Meadon’s retirement, existing manager Callum Abbott was joined by Anthony Lynch and Katen Patel in July 2024, forming a well-rounded Management team with expertise across UK sectors and market caps. Together, they’ve refreshed the trust’s investment approach, adopting a flexible, multi-cap strategy rooted in fundamental analysis. Whilst the trust’s core objectives remain unchanged, the managers now apply its long-standing emphasis on quality across a broader remit – targeting companies with resilient earnings, strong balance sheets, and consistent dividends across the entire market cap spectrum.

The trust has been repositioned in response to a more challenging income environment, shaped by shifting capital allocations where companies increasingly favour buybacks over dividends. A central part of this shift is to look for opportunities more broadly across the market cap spectrum. This has included a material reallocation to UK mid-cap stocks, where the managers cite a rare blend of higher yields, lower valuations, and superior growth potential relative to large caps. Recent Portfolio additions here include XPS Pensions and Cranswick.

In FY 2024, JCH’s total Dividend rose by 2.6% – ahead of inflation – and marked its 52nd consecutive annual increase. Whilst the dividend wasn’t fully covered by earnings, prompting the board to draw on reserves, the managers’ renewed focus toward small- and mid-caps aims to enhance the underlying income generated and rebuild reserves over time.

JCH delivered a NAV total return of 14.6% over the past 12 months, outperforming the 12.5% total return achieved by the FTSE All Share Index. Stock selection – particularly within financials – was the key driver of Performance, with 3i Group, HSBC, and NatWest among the top contributors. At the time of writing, JCH trades at a 5.3% Discount, wider than its five-year average of 3.4%. However, the discount widened around two years ago following the sale of JPMorgan Elect’s holding as part of its combination with JGGI and has traded relatively consistently since then.

We believe JCH offers an attractive blend of resilient, yet rising income with long-term capital growth potential, particularly at a time when UK equities remain undervalued and under-owned. With a strong long-term performance profile, a 52-year record of dividend increases and a strong NAV total return of 14.6% over the 12 months to 16/06/2025 – well ahead of the FTSE All Share Index – the trust continues to demonstrate strength in uncertain markets.

However, delivering rising income is never easy and is becoming increasingly difficult against the current market backdrop where more UK-listed companies are prioritising share buybacks over dividends. In this context, though, JCH could be a compelling proposition. The refreshed management team have injected renewed energy and sharpened the portfolio’s focus, with a meaningful tilt toward high-quality mid-cap stocks, now around 11% overweight versus the benchmark. Whilst the trust is not a dedicated mid-cap strategy, its c. 10% underweight to large caps reflects a clear, current preference for mid-cap businesses offering a rare mix of yield, attractive valuations, and stronger growth potential. We believe this shift is both timely and necessary, helping to drive future income growth, rebuild reserves, and extend the trust’s dividend track record.

Investors should be mindful that the most recent dividend was uncovered and required a draw from reserves, which now sit below historic levels. And whilst the new team bring strong credentials, it’s reasonable to expect some investors may take time for confidence around the trio’s long-term delivery of JCH’s objectives.

Nonetheless, we think the early signs are promising. Performance has been strong, positioning is more dynamic, and the managers appear committed to enhancing the portfolio’s underlying income and rebuilding reserves – whilst continuing to deliver long-term capital growth. With JCH trading on a 5.3% discount, wider than its five-year average, this may present an attractive entry point for long-term, income-focussed investors.