JPMorgan European Investment Trust - Income - Ordinary Shares - J.P. Morgan Asset Management
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JPMorgan European Investment Trust plc - Income Shares
(GB00B17XWW44)

JPMORGAN EUROPEAN INVESTMENT TRUST PLC - INCOME SHARES

Be prepared for any weather

JPMorgan European Investment Trust plc – Income Shares seeks out continental European companies that pay sustainable dividends in order to maintain an attractive quarterly income for shareholders.

Morningstar 5 star   *   

 

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About this trust

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Manager Commentary

Fund Managers

Month in review

  • Positive contributors to relative returns included underweight positions in software & computer services and in healthcare equipment & services.
  • Detractors included stock selection in oil & gas producers and an overweight position in forestry & paper.
  • At the stock level, an underweight position in SAP, the German software corporation, was positive for relative returns in October. The company reported third-quarter operating profits that were below expectations due to a weaker mix effect, where the low margin cloud business performed better than higher margin divisions.
  • Our underweight position in Anheuser-Busch InBev, the Belgian brewing company, also contributed positively to returns this month. Shares fell following a weak quarterly earnings update, in which results missed analysts' estimates and the company cut the dividend by 50% in an effort to pay down debt to reduce leverage. Anheuser-Busch InBev continues to suffer from an industry-wide decline in beer sales, while flagship brands Budweiser and Bud Light have been losing market share.
  • On the other hand, our underweight position in Nestlé, the Swiss food and drinks company, contributed negatively to returns this month. In the face of a market selloff, Nestlé, along with traditional consumer staples companies, fared better than the rest of the market as investors looked to the relative safety of large cap defensive companies.
  • An underweight position to Linde was also negative. The industrial gas firm received approval from U.S. antitrust enforcers for its merger with Praxair, allowing the firm to form the world’s largest industrial gas supplier. The approval had taken a significant amount of time, which had added to the doubt around its possible success. As a result, the share price has risen strongly off the back of the news.
  • Looking ahead

  • Despite the recent slowdown in growth, we still expect eurozone GDP to rise by around 2.0% this year and 1.8% in 2019, and this underpins 2018 earnings growth expectations of around 7.0% and dividend growth of 6.3%.
  • The largest portfolio increase at the stock level was in Zurich Insurance, which was purchased due to its cheap valuation as well as our desire to reduce our financials underweight.
  • On the other hand, we sold our position in BASF after the firm missed its third-quarter targets, which, combined with the growing macro challenges, contributed to us no longer seeing a catalyst to change this negative momentum.
  • Valuation has become more attractive with the falls in prices, and when we take into account expected earnings and dividend growth of 10% and 7% respectively in 2019 then next year’s basis for valuations looks even more attractive.
  • The European Central Bank, although reducing accommodation, is still pursuing a loose monetary policy, and consumer confidence is high across the continent. We feel confident that stronger earnings can propel equity markets higher into the end of 2018, and we think that the balance of political risks will subside in the next six months.
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    This is a marketing communication and as such the views contained herein are not to be taken as an advice or recommendation to buy or sell any investment or interest thereto. Reliance upon information in this material is at the sole discretion of the reader. Any research in this document has been obtained and may have been acted upon by J.P. Morgan Asset Management for its own purpose. The results of such research are being made available as additional information and do not necessarily reflect the views of J.P. Morgan Asset Management. Any forecasts, figures, opinions, statements of financial market trends or investment techniques and strategies expressed are unless otherwise stated, J.P. Morgan Asset Management’s own at the date of this document. They are considered to be reliable at the time of writing, may not necessarily be all inclusive and are not guaranteed as to accuracy. They may be subject to change without reference or notification to you. 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. Changes in exchange rates may have an adverse effect on the value, price or income of the products or underlying overseas investments. Past performance and yield are not reliable indicators of current and future results. There is no guarantee that any forecast made will come to pass. Furthermore, whilst it is the intention to achieve the investment objective of the investment products, there can be no assurance that those objectives will be met. J.P. Morgan Asset Management is the brand name for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. To the extent permitted by applicable law, we may record telephone calls and monitor electronic communications to comply with our legal and regulatory obligations and internal policies. Personal data will be collected, stored and processed by J.P. Morgan Asset Management in accordance with our EMEA Privacy Policy www.jpmorgan.com/emea-privacy-policy.

    Investment is subject to documentation. The Investor Disclosure Document, and Key Features / Terms & Conditions can be obtained free of charge from JPMorgan Asset Management (UK) Limited, and the Key Information Document can be obtained from JPMorgan Funds Limited or www.jpmam.co.uk/investmenttrust. This communication is issued by JPMorgan Asset Management (UK) Limited, which is authorised and regulated in the UK by the Financial Conduct Authority. Registered in England No: 01161446. Registered address: 25 Bank Street, Canary Wharf, London E14 5JP.

    Morningstar Analyst rating as at 01 November 2018.

    Source: Morningstar (www.morningstar.co.uk)

    Morningstar Ratings™: © 2018 Morningstar. All rights reserved.

    FE Crown Fund Ratings © 2018 FE. All rights reserved.

    Moneyfacts award as at: 17 November 2017. ©2017 Moneyfacts Group plc. All Rights Reserved.

    Moneywise Investment Trust awards as at: 28 March 2018. Moneywise Publishing Ltd ©2018. All Rights Reserved.

    *Source: Association of Investment Companies, April 2018

    Past performance is not a reliable indicator of current and future results.