Fund Profile

JPMorgan UK Smaller Companies 25 January 2024


Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by JPMorgan UK Small Cap Growth & Income. 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.

JMI’s proposed combination with JMF will offer investors a range of potential benefits…

The managers of JPMorgan UK Smaller Companies (JMI), Georgina Brittain and Katen Patel, look to take advantage of the lack of research at the smaller end of the UK equity market cap spectrum to find highly innovative or disruptive firms. They take a bottom-up approach that aims to identify companies that can grow rapidly and become the medium and large firms of tomorrow (see Portfolio). Following an announcement in November 2023, JMI is planning a combination with stablemate trust JPMorgan Mid Cap (JMF), subject to shareholder approval.

The combination will grow JMI’s asset size, increasing liquidity and lowering costs. It will also see the introduction of an enhanced dividend strategy, which will see a 4% yield on NAV paid from a combination of income and capital, an increase of around 50% from the current level. There will also be a reduction in the Charges which are expected to fall by c. 20%.

The managers have delivered excellent Performance over the long term, generating alpha in six of the past seven years and generating strong cumulative outperformance of the benchmark. The trust had a rare challenging period in 2022 but has recovered since, driven by strong stock selection.

Despite the bounce back, the managers believe valuations in the portfolio are low as a result of negative sentiment, best demonstrated by a good free-cash-flow rate versus the benchmark, whilst still exhibiting considerably higher quality and better momentum. The managers have looked to capture this by increasing Gearing towards the top end of the range.

The negative sentiment has resulted in the trust trading at a wide Discount. The current level is in line with the five-year average and the peer-group average, despite the long-term outperformance.

Kepler View

In our opinion the proposed combination has a number of beneficial features for investors. It will likely result in lower Charges, as well as offering an enhanced Dividend policy, which is often popular amongst retail investors. We believe this new vehicle would offer investors a stronger total return offering, with income alongside the capital growth potential of the asset class.

We believe the track record of managers Georgina and Katen is very impressive, the pair having delivered considerable outperformance of the benchmark over the long term, demonstrating the effectiveness of their process and the strength of the resources available to them at JPMorgan. Despite this, the trust is trading on a wide Discount, which we believe is a result of negative sentiment towards the UK small-cap market. As such, we think this could make a compelling entry point for long-term investors. The recently announced combination could have an impact on this, due to the expected improvement in liquidity from the combined vehicle, should it achieve shareholder approval.

The portfolio is currently positioned to capture a recovery in the UK too, with Gearing towards the top end of the range, and the managers rotating into their higher-conviction ideas to ensure they are capturing the best value, quality, and momentum on offer. Should their thesis on a potential recovery prove correct, we believe there is considerable upside on offer from both a continued recovery in Performance and a narrowing of the discount.


  • Excellent long-term track record
  • Trust is trading at a wide discount to NAV
  • Post-combination should enjoy benefits of scale, being cheap and more liquid


  • Gearing is towards the top of its range, which can amplify market movements
  • Less concentrated portfolio than peers, which can be a headwind in rising markets
  • Has historically been more volatile than peers
Continue to Portfolio

Fund History

25 Jan 2024 Fund Analysis
JMI’s proposed combination with JMF will offer investors a range of potential benefits…
10 Jan 2024 Definitely maybe
Fund flows and discounts may shed some light on a once-in-a-generation opportunity…
13 Jul 2023 Video interview with JMI Manager Georgina Brittain
We talk valuations, M&A and the attractions of UK small caps...
25 Apr 2023 Fund Analysis
Macro concerns have knocked JMI to a discount, despite the managers’ strong long-term performance…
13 Apr 2023 Far from the madding crowd
Smaller nimble companies, both public and private, may be best placed to navigate the current environment…
06 Apr 2023 Fallen Kingdom?
Since the UK was described as a ‘Jurassic Park’ stock market, it has outperformed. Is this a new age for the stock market..?
18 Jan 2023 Fortune favours the brave
Our research suggests a recession has already been priced into small cap trusts, but risks abound...
11 Jan 2023 Solving the Rubik’s Cube
We reveal the winners of our investment trust ratings for 2023…
06 Jul 2022 Fund Analysis
JMI’s widening discount may be an attractive entry point into the best-performing UK small-cap trust over the long term…
22 Jun 2022 Spider's web
We outline our new quantitative system for mapping the crucial performance characteristics of investment trusts…
16 Feb 2022 Perfectly formed
Our research suggests that investment trusts really are a better way to gain exposure to smaller companies…
05 Jan 2022 Kepler’s top-rated trusts for 2022
We unveil the winners of our ratings for 2022 in the Growth, Income & Growth and Alternative Income categories…
13 Oct 2021 Results analysis: JPMorgan UK Smaller Companies
JMI has built on its excellent track record, taking a balanced approach to a dynamic asset class…
08 Jul 2021 London Calling
UK equities represent a ‘once in a generation’ opportunity according to the managers who joined us at our event last week…
07 Jul 2021 Slides and Audio: JPMorgan Smaller Companies
Download the presentation and listen to the audio from our 'Cool Britannia' Summer conference on 01 July...
07 Jul 2021 Slides and Audio: Roundtable - Small is beautiful
Download the presentation and listen to the audio from our second roundtable discussion with Dan Whitestone, Georgina Brittain and Judith MacKenzie...
23 Jun 2021 Time to back Britain?
After a challenging period for the United Kingdom, we wonder if it could be the most exciting market on a five-year view…
21 May 2021 Fund Analysis
JMI has a strong long-term track record of outperformance...
25 Mar 2021 Results analysis: JPMorgan Smaller Companies
JMI continues to be a compelling proposition for investors even on a tighter discount, after releasing a strong set of half-year results this morning…
06 Jan 2021 This time next year Rodney...
We review the performance of the team’s ‘top picks’ for 2020 – including some proper plonkers – and place our bets for the year ahead…
23 Dec 2020 Fund Analysis
One of the strongest performing trusts in 2019, we look at JMI and the portfolios continued outperformance of the benchmark and peers…
21 Jul 2020 A game of four quarters
Seven trusts, two quarters. Are our team still happy with their trust picks for 2020?
27 Feb 2020 Fund Analysis
After an extraordinary 2019, JMI has seen its discount once more slip, offering a potentially attractive entry point…
02 Jan 2020 Crystal Balls
Drunk on our success in choosing funds to perform well in 2019, the team at Kepler Trust Intelligence is back at the table with a glint in its eye…
07 Aug 2019 Fund Analysis
The managers of JPMorgan Smaller Companies apply a clear, consistent process to UK smaller companies to produce consistent returns...
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