Unconstrained but selective, JPMorgan Global Growth & Income plc (JGGI) is a portfolio of high-conviction investment ideas—growth or value—from around the world.
Unconstrained but selective, JPMorgan Global Growth & Income plc (JGGI) is a portfolio of high-conviction investment ideas—growth or value—from around the world.
Less than 3% of 2,500 companies covered by the broader J.P. Morgan Asset Management research team make the final cut into JPMorgan Global Growth & Income plc (JGGI). That selectivity has generated significant outperformance in markets that have favoured growth stocks and during periods where value stocks drove market returns.
One of the key drivers of these results is the portfolio management team’s focus on companies with fundamental characteristics that are above the market average. The team also looks for businesses with high barriers to entry and high profitability, which will typically outperform lower-quality businesses over a full economic cycle.
Unprecedented trade uncertainty is spiking volatility
Many investors have recently felt as if uncertainty and market volatility were at extraordinarily high levels—and indeed they are. Since the Trump administration’s tariff announcements, the Bloomberg Global Trade Uncertainty Index has spiked to an off-the-charts record high while the US Economic Policy Uncertainty Index has jumped back up to Covid-era levels. The extreme uncertainty is manifesting in more volatile markets, with the VIX, which measures volatility, crossing 50 for only the third time since 2000.
The lack of clarity over trade policy, in addition to a deteriorating geopolitical backdrop, makes longer-term earnings growth much harder to assess and many investors have become short-term focused. That’s causing some big share price moves that can create interesting opportunities.
For instance, US retailer Walmart’s earnings increased 7% in 2024 and investors rewarded the stock with a whopping 70% share price increase over the course of the year. In the same year, US-based fast-food chain McDonald’s recorded an 8% decline in earnings and its share price fell 2%. 1As a result, Walmart, which has typically traded at a discount to McDonalds, is now trading at a valuation premium to not just McDonald’s but also Amazon. While these companies are mentioned to illustrate market trends and not as recommendations, JGGI continues to hold an overweight position in the fast-food giant, which now we think looks even more attractively valued.
Opportunities are opening up
In this environment, the JGGI portfolio team is looking carefully at opportunities that are opening up from either extreme market rotations or stocks that have been unduly punished.
During the flurry of tariff announcements, investors sold out of US high-growth cyclicals, such as semiconductor companies, and bought European value stocks, which then outperformed significantly.
Semiconductors were left trading at compelling valuations and the JGGI portfolio managers believe that dominant players, such as TSMC, are well positioned for continued future growth. Microsoft, another large holding in the portfolio, also sold off in the rotation out of growth stocks and now trades at an attractive valuation, especially given the company’s strong artificial intelligence (AI) growth potential.
The growth and adoption of AI will benefit companies well beyond the technology industry. JGGI has a position in Southern, a power company in Georgia that is benefiting from the recent rise in power demand in the US. We believe, the company is well located to profit from data centre growth and increasing power consumption.
As investors pivoted away from cyclical growth stocks, their valuations became more attractive while valuations of some companies deemed safe havens from tariffs rose to lofty levels. The portfolio managers noticed this dynamic with Ross Stores, a US discount retailer that investors were viewing as a cyclical stock despite its resilient revenues, and added to a position.
At the same time, JGGI trimmed holdings in US consumer companies Coca Cola and Pepsi, as well as German financial exchange Deutsche Boerse and US insurance broker Aon, all of which were trading at premium valuations. The team also trimmed LVMH, which despite strong long-term contributions to the portfolio, has more recently underperformed largely due to weak Chinese consumer confidence.
Looking ahead
The JGGI portfolio managers expect market volatility to continue in the near term but feel confident in the ability of the investment strategy to yield strong returns. JGGI benefits from the sector and regional expertise of over 80 research analysts at J.P. Morgan Asset Management to help the portfolio managers find the best 50-90 investment ideas across the global equity universe.