Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by JPMorgan Emerging Markets. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
JMG is aimed at investors who want to maximise their outperformance over the long term…
Overview

JPMorgan Emerging Markets (JMG) exemplifies many of the characteristics investors look for in an actively managed portfolio. The managers, Austin Forey and John Citron, focus relentlessly on identifying the best companies in their region rather than trying to anticipate the turns in the business or political cycles. They are truly long-term in their approach, with turnover below 10% in the average year over the past decade. Stock-picking is built on a rigorous and consistent process which is continually tested against results and applied via a consistent and thought-out strategy based on an analysis of how excess returns have been generated in the past.

The results have been excellent in recent years, and over the past decade the trust has outperformed its index and peer group by a significant amount, as we discuss under the Performance section. Austin and John have benefitted from some tailwinds since 2018, with low interest rates boosting growth stocks, China going through a burst of development and integration, and ecommerce and technology given a boost by the pandemic, but good stock-picking has driven returns for the most part. While the managers acknowledge sometimes the economic environment might run against them – as it has over the last six months – they remain convinced that over the long run focusing on earnings growth and closing one’s ears to the noise is the way to add alpha.

With the weakness in emerging markets seen during 2021, JMG’s discount has crept out to c. 11%, wide compared to the premium it saw in early 2021 and the five-year average of 9.1%.

Kepler View

JMG is a premium product. The exceptional track record is built on strong foundations, with a disciplined, repeatable process that is clearly well-thought out and the assumptions of which have been examined quantitatively and honed over many years. However, amid the plaudits, we think it is important to recognise the trust has benefitted from some tailwinds in recent years. However, the world economy is now going through a volatile period as investors reassess positions in the light of rate rises and quantitative tightening in the US and the end of the pandemic. As a result, this has not been a good six months for JMG as value stocks and cyclicals have been more in vogue. It is important to recognise that such a period could continue for some time, depending on how markets digest higher rates, and body politics digest higher inflation. We think it is reassuring to know that Austin and John will not change their approach and won’t lower their gaze from the long-term horizon, and think the trust should suit investors who are equally willing to take a long-term view.

The discount is a potential kicker. We would argue thought that, for those who truly are investing for the long run, any narrowing or widening of the discount should be insignificant compared to the returns to the portfolio – if it can generate the double digit annualised returns it has done in the past and which the managers believe possible in the future.

bull bear
Long-term approach to stock-picking has led to consistent outperformance
Strong style and sector biases could lead to underperformance at times
Huge research team allows for full and detailed coverage
Reticence to gear limits potential in rising markets (as it limits losses in falling markets)
Preference for ungeared quality companies could prove beneficial in tough economic environments
Concentrated exposure means single stocks can negatively impact returns as well as positively
Continue to Portfolio
2022 Kepler Growth Rated Fund

This trust has been awarded a rating by Kepler Trust Intelligence for growth... Find out more

Fund History

13 Jul 2022 Ready player one
We wonder where, if anywhere, should investors look for returns after a tumultuous first half of the year…
02 Mar 2022 Fund Analysis
JMG is aimed at investors who want to maximise their outperformance over the long term…
08 Dec 2021 We are the (ESG) champions
Investment trusts tend to be amongst the best-performing ESG strategies in the combined open- and closed-ended universe…
26 May 2021 Fund Analysis
JMG has delivered exceptional long-term returns with a patient, high conviction approach…
20 Jan 2021 Kepler's top-rated investment trusts for 2021
We update our annual quantitative ratings for investment trusts…
11 Nov 2020 Fund Analysis
JMG has had another outstanding year despite the pandemic…
11 May 2020 Fund Analysis
JMG’s patient, low-turnover approach has left it top of the performance tables…
29 Apr 2020 On solid ground
Our analysis of discounts highlights trusts which are likely to offer significantly less discount downside from the current level…
14 Aug 2019 Dangerous ground: the perils of timing the market
Our research shows that attempting to time the market is, more often than not, a mug's game...
10 Jul 2019 Fund Analysis
JPMorgan Emerging Markets uses deep resources to identify companies with the potential to continue compounding earnings faster than the market...
30 Jan 2019 The Growth Portfolio
Our ten investment trust picks for long-term capital growth...
21 Dec 2018 Fund Analysis
The trust has been a consistent outperformer investing in volatile emerging markets...
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