Fortress Claverhouse - J.P. Morgan Asset Management

Fortress Claverhouse

Small and medium sized companies
JPMorgan’s Claverhouse Investment Trust could offer investors a safe haven in stormy waters.

When the investing waters are choppy, investors inevitably turn towards shore. In the midst of such a market downturn as we have experienced due to Covid-19, riding out the storm requires calm hands on the tiller, and a firm anchorage. Sentiments are likely to remain risk-averse until fears of deep recession dissipate and the markets storms subside once more. However, investors looking for income in the short term, as well as medium to long-term growth potential, could consider seeking shelter in the relative safe haven of an investment trust such as JPMorgan Claverhouse.

Record growth

So why consider JPMorgan Claverhouse? Of course, past performance is not a reliable indicator of current and future results, but JPMorgan Claverhouse has an imposing fortress balance sheet. It has delivered consistent out-performance with 47 consecutive years of dividend growth. That’s the longest of any trust invested just in the UK. Investors who stayed in the market for that whole period would have also benefitted from significant compound gains.

Portfolio in a storm

JPMorgan Claverhouse follows a long-term strategy; its portfolio built to stand firm through short and medium-term market fluctuations - even the more extreme ones such as the present. ‘The portfolio strategy is simple: focus on well-established UK companies which have the resilience to see them through these hard times. The portfolio includes FTSE100 mainstays, from utility providers to oil and gas companies, pharmaceuticals, and robust financial institutions. The team’s particular focus is on the ability of companies to withstand this crisis continuing for some while yet. We are therefore closely scrutinizing the balance sheets, cash flows and possible funding requirements of companies together with the robustness of their business models. We are of course hoping for the best but when we invest in companies, we want to be as sure as we can be that the companies can withstand the worst.’ explains JPMorgan Claverhouse fund manager , William Meadon. ‘With Claverhouse, you’re investing in the bluest of blue-chip portfolios which includes stocks such as AstraZeneca, Glaxo, Tesco and Rio Tinto.’

Plenty in reserve

In addition, this is a portfolio biased toward those blue chips that we see as having a higher chance of paying dividends throughout difficult times such as these. With dividend cuts becoming standard and expectations rising that payouts are heading for significant falls this year, one of the attractions of JPMorgan Claverhouse, with its investment trust structure, is that it can draw upon revenue reserves to enable a consistent dividend stream to investors. Unlike open-ended funds, investment trusts don’t have to distribute all the income received from their investments. In fact, trusts can retain up to 15% of their income in any year. ‘Thanks to the good-times prudence of previous Claverhouse boards, who tucked away profits in particularly strong years, we believe we have wonderfully strong reserves that we can use to pay dividends in leaner years,’ says William.

With such low interest rates, with gilts yields minimal, in the short term income is hard to find anywhere in the market. But JPMorgan Claverhouse, which has consistently traded on a premium and pays out dividends quarterly, could offer an option for investors looking for income.

Up through the gears

Looking ahead, JPMorgan Claverhouse can enable investors to take full advantage of any UK equity market bounce-back. This is where another strength of investment trusts comes into play. Trusts can borrow money to take advantage of investment opportunities - known as ‘gearing’. So when the UK equities market starts to pick up again, the trust can put gearing into action in order to give investors more exposure to it. Of course, if the trust’s assets fall in value, gearing can also increase the potential for losses but, benefiting also from the cheap borrowing available, we’ll hope to capitalise on a market surging back to health, whenever that is.

Strength and stability

From a fund manager’s point of view, another advantage of investment trusts is that they have a fixed number of shares, or pot of money. This provides a relatively stable underlying capital investment base and means that the investment team can invest in and sell assets when the time is right, rather than when investors join the fund or redeem their shares. ‘This gives real stability to the fund, enabling the team to focus on the investment objective of the trust and the quality companies that could help deliver the long term goals,’ says William.

Safe hands

With recent market shocks still reverberating, investors will naturally want reassurance that their assets are in reliable hands. Every investment trust has an independent board of directors to safeguard shareholder interests. It monitors its cost base, and the performance of fund managers and ensures value for shareholders.

Not only does JPMorgan Claverhouse have a highly professional board with deep knowledge of investment trusts, but the investment management team has 44 years’ combined experience. These strengths will be invaluable for steering the trust through current and future market volatility. Whatever stormy weather lies ahead, JPMorgan Claverhouse may offer calmer waters for investors looking for both income and capital growth.


Important information

This is a marketing communication. It should be noted that the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Past performance is not a reliable indicator of current and future results. There is no guarantee that any forecast made will come to pass. Investment is subject to documentation. The Investor Disclosure Document, Key Features and Terms and Conditions and Key Information Document can be obtained free of charge from JPMorgan Funds Limited or Our EMEA Privacy Policy is available at This communication is issued by JPMorgan Asset Management (UK) Limited, which is authorised and regulated in the UK by the Financial Conduct Authority.


Important information

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from J.P. Morgan Asset Management or any of its subsidiaries to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own professional advisers, if any investment mentioned herein is believed to be suitable to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields is not a reliable indicator of current and future results.

J.P. Morgan Asset Management is the brand for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. This communication is issued in the United Kingdom by JPMorgan Asset Management (UK) Limited, which is authorized and regulated by the Financial Conduct Authority, Registered in England No. 01161446. Registered address: 25 Bank Street, Canary Wharf, London E14 5JP.