JPMorgan Smaller Companies Investment Trust

Last updated 07 August 2019

The managers of JPMorgan Smaller Companies apply a clear, consistent process to UK smaller companies to produce consistent returns...

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by JPMorgan Smaller Companies Investment Trust . 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.

JPMorgan Smaller Companies Investment Trust

JPMorgan Smaller Companies (JMI) aims to give investors access to fast-growing, innovative smaller companies that often have their own structural growth drivers, making them less directly linked to the performance of the overall UK economy.

Georgina Brittain has managed this trust for more than 20 years and was joined by Katen Patel six years ago. The team uses a bottom-up stock picking approach to take advantage of the inefficiencies in the small-cap market that offer a diverse range of alpha-generating opportunities. The team uses both quantitative and fundamental analysis to find companies that exhibit quality, momentum and value characteristics, creating a diverse portfolio of 88 holdings. The largest sector overweights come from the media (6.3%), leisure goods (6.2%) and financial services (3.9%) sectors. At the other end of the spectrum, the trust has little exposure to support services (-3.1%), travel and leisure (-2.9%) and pharma and biotech (-2.7%) relative to the benchmark.

Returns over the long term have been impressive for the trust, which has outperformed the benchmark in eight of the past ten calendar years. Over a five-year period, the trust has generated NAV total returns of 55.1%, once more beating the benchmark’s return of 29.6%, as well as the AIC and IA peer groups, which returned 51% and 53.3% respectively. More recently, the trust’s performance has been a tale of two halves. The trust was hit particularly hard during the fourth quarter of 2018, losing close to 20% NAV total returns. Since then the trust has bounced back, returning NAV total returns of 19.3%, double the benchmark returns of 9.9% and considerably more than the AIC peer group (12.8%) and the IA peer group (12.1%).

Alongside capital appreciation, the trust offers investors a reasonable level of income. Currently the trust yields 2.4% and the dividend has increased by 23.7% over the past five years. Nevertheless, the trust has had a stubborn discount since the European Union membership referendum in 2016 and over the past year the trust has traded, on average, at a discount of a little under 15%. Currently the discount sits at 14%, as at 26 Jul 19.

William Sobczak
William joined Kepler Partners in February 2018 as an investment trust analyst. Prior to joining, William graduated from the University of Western Australia, with a BSc in Psychology.

Related Research

Key facts

Investment objective

The Company aims to provide capital growth from investing in UK smaller companies by outperformance of the FTSE Small Cap Index...

As at:

02/08/2019

Group/Investment

JPMorgan Smaller Companies

Ticker

JMI

Management Company

JPMorgan Asset Management Inc

Manager Name

Georgina Brittain; Katen Patel;

Association of Investment Companies (AIC) Sector

UK Smaller Companies

12 Mo Yield

2.1%

Dividend Distribution Frequency

Annually

Latest Market Capitalisation

£178,737,391

Latest Net Gearing (Cum Fair)

9.2%

Latest Ongoing Charge Ex Perf Fee

1.02%

Turnover Ratio

37.7%

Shares Outstanding

78,540,106

(Discount)/ Premium (Cum Fair)

0.0%

Daily Closing Price

227.5p

Source: Morningstar

Disclaimer

This report has been issued by Kepler Partners LLP.  The analyst who has prepared this report is aware that Kepler Partners LLP has a relationship with the company covered in this report and/or a conflict of interest which may impair the objectivity of the research.

Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor independent financial advice should be taken before making any investment or financial decision.

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