With roots stretching back more than 150 years, J.P. Morgan Asset Management’s investment trusts have evolved with global markets while maintaining a focus on helping investors balance long-term growth with dependable income.
From steam railways to potato varieties, the ‘heritage’ label conveys a strong and valuable message to consumers. It implies a product worth seeking out for the high-quality rewards it can deliver and a track record that has stood the test of time.
That message is equally relevant in the context of the investment trust industry – itself the oldest form of collective investment, with a history dating back to the second half of the 19th century.
Among those early pioneering investment companies, the business that was to metamorphose into J.P. Morgan Asset Management (J.P. Morgan) played a central role – a position it retains today as one of the UK’s leading managers of investment trusts.
A legacy that shaped investing
In 1873, the Scottish financier and philanthropist Robert Fleming was among the first businessmen to enable UK investors to channel their money collectively into the US railway boom and other transformational industries across the Atlantic.
Indeed, the longest-lived investment trust of the J.P. Morgan family is JPMorgan American (JAM), set up in 1881 to help fund and profit from the development of the US railroad network.
Several of JAM’s sister trusts are similarly venerable, including the UK mid-cap focused The Mercantile Investment Trust (MRC) and JPMorgan Global Growth & Income (JGGI), both well over 130 years old. These trusts have stood the test of time - navigating decades of market cycles, geopolitical upheaval and periods of inflation.
Flemings Asset Management, as his business became known, continued to provide well-heeled individuals with exposure to the best growth opportunities of the day via investment trusts, as the dramatic developments of the 20th century unfolded.
A philosophy built on changing times
As J.P. Morgan’s Head of Investment Trusts Simon Elliott observes, the sustainability and success of these investments over many decades has been built on a dual-pronged philosophy. You can also watch the video in which he shares insights on the trust’s heritage.
“Over 150 years, markets have evolved – but investors’ core needs have remained remarkably consistent: seeking a combination of capital growth for the future and dependable income today,” he explains.
The firm’s long-term success, however, has rested on its ability to look ahead and adapt as the investment landscape has changed. For much of its history, its focus was primarily on identifying companies capable of delivering reliable long-term growth.
More recently, however, investor priorities have placed greater emphasis on dependable income - partly in response to the growing need to fund retirement, but also as a way to help offset the uncertainties of increasingly volatile global markets.
And J.P. Morgan’s investment approach has moved with the times, says Elliott, with “the introduction of strategies with a clear Growth & Income proposition, such as JGGI, which is now our largest Trust, with over £3 billion¹ of assets under management”.
New growth engines
Similarly, as global markets have opened up and new regional powerhouses have emerged, the company has seized the opportunities presenting themselves, expanding its range of trusts to cover China, India, Japan and Southeast Asia.
Whilst these markets are subject to periods of short-term volatility and thus most-suited to long-term investors, increased breadth of coverage provides a twofold benefit: not only do investors gain exposure to potentially more dynamic economies enjoying faster growth than western markets, but in doing so they can build real diversification into their portfolios.
Growth, income and beyond
J.P. Morgan now oversees 16 trusts globally, some focused primarily on capital growth, others on income, and many a mixture of the two.
The success of this broad cross-section of trusts is dependent upon the resources that underpin them, most notably the 1,100 fund managers, analysts and other investment specialists based all around the world.
These professionals aim to identify the companies that have the potential both to grow their earnings over time and to generate sustainable cash flows that will provide the income investors are looking for.
J. P. Morgan’s long-established heritage in managing investment trusts has led to a number of strategies delivering strong long-term results — although, as always, past performance is not a reliable indicator of future returns.
The Association of Investment Companies (AIC), for instance, recently identified 68 investment trusts where investing the maximum ISA allowance each year since 1999, when ISAs were introduced, would have resulted in a portfolio worth more than £1 million². Among the list were no less than 11 of the 16 trusts managed by J.P. Morgan.
The AIC recently published its Dividend Heroes list, which highlights investment trusts that have consistently increased their annual dividends for at least 20 years in a row. JPMorgan Claverhouse, with 53 consecutive years of dividend growth, is one of only ten trusts to have exceeded half a century³.
But there is no room for complacency. As Elliott points out, “investor priorities have sharpened over the past few years, with volatile markets reinforcing the need for both growth that can compound and income that can smooth returns in the meantime”.
With a long-established philosophy of active management, diversification, rigorous research, coupled with a sharp eye to the future, J.P. Morgan’s range of investment trusts seeks to provide the balance many investors are looking for.