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Fund Profile


Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by JPMorgan American. 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.

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For six months now, JPMorgan American (JAM) has had a new team behind it. In general portfolio terms, the change has not been revolutionary. However, in other ways, there have been very meaningful changes.

Since June, two highly regarded individuals (Jonathan Simon and Timothy Parton) within JPM’s US Equity team have been investing JAM’s large cap assets. What sets them and the new set-up apart, is that one is a specialist value investor, whilst the other is a specialist growth investor. Each manager has discretion when it comes to holdings, but with a strong awareness of the other in a portfolio context. The split between growth and value is expected to remain fairly evenly balanced over time, but they do have the option to strategically tilt between the styles - find out more about how the team constructs the portfolio here.

They have each been tasked with managing a highly concentrated portfolio of between ten and 20 stocks, meaning JAM’s large cap portfolio can constitute between 20 and 40 stocks at any one time. In reality, the large cap portion will typically be around 40 names. This is highly concentrated by traditional portfolio standards, and means the large cap portion of JAM has the lowest number of portfolio holdings in the North America investment trust sub-sector.

Gearing is expected to be a feature of JAM, but it is tactically employed, rather than being structural. Deploying gearing is driven by both the board and manager. In October 2018, the range agreed between the board and manager was set at 0%, plus or minus 2%. In November 2019, gearing was reintroduced in the portfolio. We examine the gearing policy in more detail here.

With the US equity market seemingly so hard for active managers to beat, Timothy and Jonathan’s specialist and concentrated approach has paid off – with the strategy having historically outperformed the benchmark as well as investment trust and open-ended peer group averages. It is clearly early days yet, with only six months having elapsed, but so far they are marginally underperforming the benchmark on a sterling total return basis, as we discuss here.

Kepler View

In our view, the new process is highly distinctive, reflecting as it does the best ideas of two managers with very different growth and value stock selection styles. The concentrated strategy seems especially well suited to JAM as a closed-ended fund, where the structural advantages afford more latitude to run concentrated portfolios. The result is a highly attractive core US equity exposure, in our view.

The two new managers have an unrivalled analytical resource behind them, not to mention depth of experience – with each manager having over 30 years of having seen cycles play out. This is likely a factor behind the strategy, which is named Equity Focus, having delivered higher returns than JAM’s investment trust peer group with lower volatility and drawdown. This is clearly an impressive result given the much more concentrated nature of the portfolio, and points to the diversification benefits that having two specialist growth and value managers build a portfolio together can bring.

According to Morningstar style analysis, JAM’s exposures across growth, value and core are the most evenly balanced in the sub-sector. This validates the managers’ thesis that the trust should be proof against periodic rotations between value and growth. This is an important consideration for investors who might want to take ‘US growth’ risk off the table, yet still maintain exposure to US equity markets, and makes JAM a strong potential candidate.

In performance terms, it is clearly early days yet. However, being fundamental, long-term stock pickers, we expect that Jonathan and Timothy’s historic track record of outperformance will revert over the medium term. The change in manager seems to have had an effect of slowing buybacks, but it remains to be seen whether the new managers can stimulate enough demand to stop them altogether.

The board’s work in negotiating fees down yet further makes the OCF (forecast at 0.2% for 2019, and 0.33% for 2020) very competitive relative to both active and passively managed strategies. As time goes on, and as the investment trust world gets to know the managers better, there is certainly the potential for the discount to narrow sustainably. Over the short term, the discount to the peer group average looks rather unfair.

bull bear
Interesting strategy, which has a strong historic track record Managers relatively unknown in the investment trust sphere, and track record will take time to develop
Large, liquid trust representing the only 'core' US strategy in the investment trust sphere with the benefit of a highly differentiated approach Lower portfolio income means investors can expect lower dividends going forward, all things being equal
Very low OCF Tactical use of gearing could exacerbate downside if managers get timing wrong
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Fund History

27 Mar 2024 Results analysis: JPMorgan American
JAM continues to cement its position as a core US equity trust with another year of outperformance…
01 Feb 2024 Bring some yin-yang into your portfolio in 2024
Inherent contradictions within portfolios can give them stability in a polarised world...
06 Sep 2023 You should be dancing…
North America should be a core part of any portfolio…
06 Jul 2023 Fund Analysis
JAM’s outperformance puts it in the spotlight as a low-cost, core option for US equities…
16 Mar 2023 Diversity matters
We examine the effect of blending multiple funds within your regional allocation and find that – while the culture wars may rumble on elsewhere – the benefits of diversity for investors are unarguable…
21 Nov 2022 Fund Analysis
JAM’s continued outperformance puts it in the spotlight as a low-cost, core option for US equities...
05 Oct 2022 European equities: Oui ou non?
Our analysts go head to head on the prospects for investors looking to the continent for prospective investments...
07 Sep 2022 American muscle
Beating US indices is a monumental task. We examine the closed- and open-ended North American sectors to see how they have fared…
15 Jun 2022 Staying active
We highlight several alternatives to passive investments for investors looking for core exposure in uncertain markets...
05 Apr 2022 Fund Analysis
JAM’s blended approach to US equities has allowed it to outperform in a very difficult market…
30 Mar 2022 You say tomato…
Do it yourself or put it into a global fund and leave it to the experts - our analyst debate the merits of each approach...
17 Nov 2021 How Do You Like Them Apples
Judging whether the US market is expensive is not as easy as many make it out to be…
06 Oct 2021 Fund Analysis
JAM offers investors a ‘one stop shop’ to US equities, with a core approach that has outperformed the S&P 500…
22 Apr 2021 FAANGs for the memories
The massive outperformance of mega-cap tech last year could become a thing of the past if anti-trust legislation and negative sentiment starts to bite...
31 Mar 2021 East End boys and West End girls
Our analysts debate whether the US or Asian stock markets will deliver the best returns over the next decade…
31 Mar 2021 Fund Analysis
JAM offers investors a core portfolio of US equities, blending both growth and value styles, while aiming to outperform the S&P 500…
19 Nov 2020 Hope springs eternal
The US election has given long-suffering value investors new hope of a 'great rotation' in their favour, but that light at the end of the tunnel could in fact be a train…
01 Sep 2020 Fund Analysis
In what has been a challenging year for investors, the benefits of JAM’s new approach are coming to the fore…
13 May 2020 Sea change
While global giants like Amazon still hold the weather gauge, we examine the long term prospects for a shift in the prevailing wind...
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…
13 Feb 2020 Choose your own adventure
Predicting the future is impossible, but identifying which trends have coincided in the past can give us clues about what may be to come...
05 Feb 2020 The best form of defence
We look at the continued rise of passive funds, and find out how investment trust managers are countering it...
18 Dec 2019 The squeeze continues: how trust costs keep falling
As pressure on costs remains, we reveal which trusts have achieved the most significant reductions in 2019….
12 Dec 2019 Regime change: how manager changes impact performance
Does a change in manager result in improved trust performance?
10 Dec 2019 Fund Analysis
JAM offers a reinvigorated core US equity exposure, which should help to provide protection against any future rotation between value and growth…
24 Jul 2019 Fool's gold?
We examine the relationship between how much a fund costs and how it performs, with surprising results...
26 Jun 2019 Measure for measure
In the first of a two-part series, we examine the tools investors can use to assess how active a manager actually is…
14 May 2019 Fund Analysis
JAM has been re-invigorated by a new manager set-up, due to take effect at the end of May 2019...
24 Dec 2018 Why did the chicken cross the road?
Because he was so bored of reading newspapers devoted entirely to Brexit he was hoping he’d be hit by a truck.
13 Dec 2018 Efficiency is everything
With fee structures under increasing scrutiny, we analyse which trusts limit their costs without sacrificing standards...
31 Oct 2018 The Trump effect
Two years after the shock election of Donald Trump, we take a look at what the Trump administration has really meant for US markets and the trusts that invest in them...
31 Oct 2018 Fund Analysis
One of few trusts in this sector to have outperformed the benchmark over five, ten and fifteen years...
26 Apr 2018 Fund Analysis
A North American equity fund which has outperformed the benchmark, which is notoriously hard to beat, over five, ten and 15 years...
26 Apr 2018 The $23.9 trillion dollar question*
Are US equities, which have hit record highs on 71 occasions in the last 12 months, overpriced or are they actually trading at a price worth paying?
01 Jan 2017 Fund Analysis
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