JAM’s managers believe now is a particularly exciting and interesting time for growth investors, as the sell-off in growth names over the past couple of years has created many opportunities to acquire high-quality businesses, especially tech companies, at very reasonable valuations
JAM aims to achieve capital growth from US investments by outperforming the S&P 500. The trust comprises a concentrated portfolio of around 40 large cap stocks, which represent about 90% of the total portfolio, with the balance invested in small cap growth companies intended to boost performance when growth stocks are outperforming. The trust is run by three very experienced managers, who between them posses an average of 33-years between them.
JAM has a fundamental bottom-up approach to stock selection that is not benchmark driven. Investors tend to adopt either a growth or value-oriented style, JAM’s large cap portfolio is instead spread across both growth and value names. This allows the managers to seek out the best, highest quality investment ideas across the US market, regardless of their growth or value characteristics.
For JAM’s managers, high quality means many things. At the highest level, all JAM’s carefully selected holdings tend to be the best in class, with strong and sustainable competitive advantages, good, experienced management teams and top line financial fundamentals, especially robust and resilient cash flows. In addition, value-oriented holdings tend to be undervalued relative to the quality of their franchises, while growth companies all possess large, underappreciated multi-year growth opportunities. At any time, the split between growth and value stocks is limited to 60/40, in either direction.
JAM’s position in Hubbell is a good example of a business with a long growth runway. Hubbell is a leading producer of electrical products, including transmission and distribution equipment used by utility companies. Demand for electricity and related infrastructure is set to grow rapidly, underpinned by the growing popularity of electric vehicles and the transition to renewable, clean energy sources such as solar power. Yet US utility companies have underinvested in their grids for years, and they will need to implement major, multi-year investment programs to meet future demand on their systems. Hubbell is ideally placed to supply the equipment needed for the US’s energy infrastructure upgrade, although JAM’s managers believe the market does not fully appreciate the magnitude and duration of this opportunity, nor its positive implications for Hubbell’s growth prospects.
JAM’s managers believe now is a particularly exciting and interesting time for growth investors, as the sell-off in growth names over the past couple of years has created many opportunities to acquire hi-quality businesses, especially tech companies, at very reasonable valuations. NVIDIA has been one such opportunity. This company provides graphics and networking solutions to gaming companies and various other businesses. It is a lead producer of graphics processing units (GPUs), which have multiple applications, including within the artificial intelligence (AI) value chain. Increased investor interest in AI, including from venture capitalists, combined with an expected surge in demand for AI applications within businesses, prompted JAM’s managers to open a position in December 2022 and they have since been building up exposure.
The managers have also increased JAM’s weighting in Amazon.com, the e-commerce company. The growth stock sell-off pushed Amazon’s stock price down to a more attractive valuation, which was especially appealing to JAM’s managers as they believe the company has never been stronger, and still has significant long-term growth potential. Amazon used the pandemic to cement its competitive advantage, becoming the ‘go-to’ source for myriad consumer goods. At the same time, it strengthened its customer focus and distribution and delivery infrastructure and monetised its retail business via the sale of advertising. Amazon’s cloud services are also likely to see years of strong demand as businesses and governments move their logistics, services and administration onto the cloud.
Financial markets are always vulnerable to unexpected events such as the recent turmoil in the global banking system. However, JAM’s managers expect their focus on the highest quality companies to dampen drawdowns during bouts of volatility for the portfolio during bouts of volatility. For example, the trust holds only high-quality, blue-chip banks such as Bank of America and regional player M&T Bank, which have very strong deposit and asset bases, and such well-capitalised banks are likely to benefit from a flight to quality during uncertain times.
The effectiveness of JAM’s style balanced, quality-focused approach which invests in both growth and value companies, is evidenced by the trust’s performance track record. In the three years to end-February 2023, JAM’s average annualised return has been 16.4% in in NAV terms, outpacing the S&P 500 by 250 basis points.1
1 Source: J.P. Morgan Asset Management, see below the latest full performance table for the JPMorgan American Trust plc, showing up to the last 10-years of new performance.
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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 Annual Reports and Financial Statements, AIFMD art. 23 Investor Disclosure Document and PRIIPs Key Information Document can be obtained in English from JPMorgan Funds Limited or at 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.
The risk indicator assumes you keep the product for 5 year(s). The risk of the product may be significantly higher if held for less than the recommended holding period. In the UK, please refer to the synthetic risk and reward indicator in the latest available key investor information document.
Past performance is not a guide to current and future performance. The value of your investments and any income from them may fall as well as rise and you may not get back the full amount you invested.
Source: J.P. Morgan Asset Management/Morningstar. Net asset value performance data has been calculated on a NAV to NAV basis, including ongoing charges and any applicable fees, with any income reinvested, in GBP.
NAV is the cum income NAV with debt at fair value, diluted for treasury and/or subscription shares if applicable, with any income reinvested. Share price performance figures are calculated on a mid market basis in GBP with income reinvested on the ex-dividend date. The performance of the company's portfolio, or NAV performance, is not the same as share price performance and shareholders may not realise returns which are the same as NAV performance.
Benchmark source: The S&P 500 Index (£) (“Index”) is a product of S&P Dow Jones Indices LLC and/or its affiliates and have been licensed for use by JP Morgan Chase Bank N.A. Copyright © 2023. S&P Dow Jones Indices LLC, a subsidiary of S&P Global, Inc.,and/or its affiliates. All rights reserved.
Comparison of the Company's performance is made with the benchmark. The benchmark is a recognised index of stocks which should not be taken as wholly representative of the Company's investment universe. The Company's investment strategy does not follow or track this index and therefore there may be a degree of divergence between its performance and that of the Company.
Indices do not include fees or operating expenses and you cannot invest in them.
Investment objective: Aims to achieve capital growth from North American investments by outperformance of the S&P 500 index. The Company will predominantly invest in quoted companies including, when appropriate, exposure to smaller capitalisation companies, and emphasise capital growth rather than income. The Company has the ability to use borrowing to gear the portfolio within the range of 5% net cash to 20% geared in normal market conditions.
Risk profile Exchange rate changes may cause the value of underlying overseas investments to go down as well as up. External factors may cause an entire asset class to decline in value. Prices and values of all shares or all bonds and income could decline at the same time, or fluctuate in response to the performance of individual companies and general market conditions. This Company may utilise gearing (borrowing) which will exaggerate market movements both up and down. This Company may also invest in smaller companies which may increase its risk profile. The share price may trade at a discount to the Net Asset Value of the Company. The single market in which the Company primarily invests, in this case the US, may be subject to particular political and economic risks and, as a result, the Company may be more volatile than more broadly diversified companies.
Risk Profile:
Past performance is not a guide to current and future performance. The value of your investments and any income from them may fall as well as rise and you may not get back the full amount you invested.
Source: J.P. Morgan Asset Management/Morningstar. Net asset value performance data has been calculated on a NAV to NAV basis, including ongoing charges and any applicable fees, with any income reinvested, in GBP.
NAV is the cum income NAV with debt at fair value, diluted for treasury and/or subscription shares if applicable, with any income reinvested. Share price performance figures are calculated on a mid market basis in GBP with income reinvested on the ex-dividend date. The performance of the company's portfolio, or NAV performance, is not the same as share price performance and shareholders may not realise returns which are the same as NAV performance.
Benchmark source: The S&P 500 Index (£) (“Index”) is a product of S&P Dow Jones Indices LLC and/or its affiliates and have been licensed for use by JP Morgan Chase Bank N.A. Copyright © 2023. S&P Dow Jones Indices LLC, a subsidiary of S&P Global, Inc.,and/or its affiliates. All rights reserved.
Comparison of the Company's performance is made with the benchmark. The benchmark is a recognised index of stocks which should not be taken as wholly representative of the Company's investment universe. The Company's investment strategy does not follow or track this index and therefore there may be a degree of divergence between its performance and that of the Company.
Indices do not include fees or operating expenses and you cannot invest in them.
The single market in which the Company primarily invests, in this case the UK, may be subject to particular political and economic risks and, as a result, the Company may be more volatile than more broadly diversified companies.
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