JPMorgan Global Growth & Income plc focuses on investing in the best ideas from across the world’s stock markets, along with a predictable quarterly income.
The extraordinary events of the past three years – pandemic and lockdowns, followed by the war in Ukraine, and resultant high oil, gas and commodity prices – sparked protracted market turbulence which has left many investors bitterly disappointed by the performance of their investments. JPMorgan Global Growth and Income (JGGI) has distinguished itself over this period, by performing consistently well and delivering capital growth and income while other investments have floundered.
The extraordinary events of the past three years – pandemic and lockdowns, followed by the war in Ukraine, and resultant high oil, gas and commodity prices – sparked protracted market turbulence which has left many investors bitterly disappointed by the performance of their investments. The significant declines in portfolio valuations experienced by many have been especially burdensome in the past year or so, when rapidly rising food and energy prices have sent the cost-of-living skyrocketing, putting unwelcome and unsustainable pressure on household budgets.
JPMorgan Global Growth and Income (JGGI) has distinguished itself over this period, by performing consistently well while other investments have floundered. The Company delivered significant outright gains in NAV terms in 2020 and 2021, and sustained only a small loss in 2022, decisively outperforming its benchmark and its peers, over each of these years. This outperformance has continued so far in 2023. In the three years to end March 2023, JGGI shareholders have realised an average annualised return of 17.1% in NAV terms, well above the benchmark return of 10.8% on the same basis.1
Investment performance in both growth and value markets
In 2020, growth stocks, especially tech companies, saw very substantial gains and outperformed the market as reliance on technology escalated during the pandemic. The following eighteen months or so saw value and cyclical names outpace growth stocks once widespread vaccinations facilitated the return to a more normal way of life and an associated improvement in the economic outlook. More recently, rapidly rising interest rates and the prospect of recession in the US, the UK and other developed economies have benefitted defensive names, while suppressing the valuations of growth stocks. JGGI’s ability to maintain returns in the face of such significant shifts in market sentiment attests to the managers’ ability to act quickly to capitalise on opportunities as the market environment evolves.
Although dividend payments are not guaranteed, JGGI has continued to pay an attractive, competitive and rising dividend. The dividend is paid quarterly and has been a reliable source of income helping shareholders meet their commitments and sustain their lifestyles - particularly important to many investors at the moment, given rapidly increasing living expenses.
Predictable income from dividend payments and revenue reserves
Specifically, JGGI payed a dividend of at least 4% of NAV at the end of the previous financial year. The dividend can be part-funded from the Company’s capital and revenue reserves, as well as portfolio income. However the dividend paid may also exceed the gains of the trust resulting in erosion or loss of the capital invested. Luckily, JGGI’s reserves are substantial, and capable of fully funding several years’ dividend pay-outs if necessary. This means that its managers do not need to confine their investment universe to income-producing stocks in order to meet the Company’s income objective. They are also free to invest in non-dividend paying stocks wherever the investment case and valuations are compelling.
JGGI’s managers attribute the Company’s impressive performance to two factors - its investment strategy, and the quality and depth of JPMorgan Asset Management’s extensive global equity research team which supports this strategy. The managers target the world’s high-quality companies benefiting from structural trends which will ensure they are global leaders in their respective markets over the long term, regardless of short-term market fluctuations. But price is also a key consideration - they will only invest in such companies when valuations are attractive. Risk management is a constant focus, with the aim of providing steady returns over time. The managers do not want to expose shareholders to large and painful fluctuations of their portfolios from year-to-year. To this end, the portfolio is well-diversified across sectors and regions and balanced between quality growth and more defensive businesses. The trust also uses borrowing to gear the portfolio within limited ranges under normal market conditions. Whilst gearing may magnify gains it also can increase losses, therefore Gearing is used cautiously.
The insights and recommendations of JPMorgan’s extensive team of 90 research analysts are an integral part of JGGI’s careful stock selection process. Based in the US, UK, Europe, Asia and emerging markets, these analysts have an average of almost 20 years’ industry experience. Between them, they conduct detailed analysis and valuations of 2,500 companies, across 17 sectors. The quality of their research is enhanced by the analysts’ collaborative approach. They are in regular formal and informal contact with colleagues around the world, and across sectors, to ensure they have the broadest, most in-depth understanding of their sectors, at the global level. JGGI’s managers make full and constant use of this rich, well-funded research resource as they seek to identify the most compelling investment opportunities.
With recession a real possibility in several major economies, inflation still at record highs and global geo-political tensions rising, the near-term investment environment is likely to remain challenging and volatile. However, JGGI’s managers believe equities are a great place to be long term, regardless of the prevailing macroeconomic and market environment. And the Company’s track record suggests investors seeking consistent competitive returns and outperformance, combined with regular and predictable dividends, can rely on JGGI as the bedrock of their diversified, global investment portfolio.