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.
To achieve capital growth from North American investments by outperformance of the S&P 500 Index.
Source: Morningstar, JPMorgan
JPMorgan Asset Management Inc
Jonathan K.L. Simon; Eytan M. Shapiro; Timothy RV Parton;
Association of Investment Companies (AIC) Sector
12 Month Yield
Dividend Distribution Frequency
Latest Market Capitalisation
Latest Net Gearing (Cum Fair)
Latest Ongoing Charge Ex Perf Fee
(Discount)/ Premium (Cum Fair)
Daily Closing Price
JPMorgan American (JAM) provides its investors with a balanced approach to US equity investing, with the sole objective of capital growth. JAM has a unique portfolio, with a blend of two distinct investment styles, whereby co-manager Timothy Parton manages JAM’s growth allocation, and co-manager Jonathan Simon its value portfolio. While both managers have their own criteria for selecting stocks, they both place great weight on the ‘quality’ factor during their analysis. JAM also has a small, dedicated allocation to small cap securities, run by Eytan Shapiro.
JAM is currently split 51% value, 49% growth, having reduced its exposure to growth stocks at the start of the year. Its current allocation reflects the team's risk-conscious approach to investing, with the managers being wary of a number of potential pitfalls within the market, such as the outbreak of the COVID-19 Delta variant. The team has the majority of their overweights in value stocks currently, having reduced their exposure to expensive growth stocks. We cover their process and outlook in more detail in the Portfolio section.
Since taking over the strategy in June 2019, Timothy and Jonathan have demonstrated a track record of outperformance, both since that date and also over a 12-month period. As we highlight in the Performance section, it is very difficult for ‘core’ style US equity managers to beat the S&P 500, especially over the long term. One of the reasons for this outperformance is JAM’s low cost drag, with it having the lowest costs of any North American trust. JAM’s shares trade on a 4.9% discount, narrower than the AIC North America sector average.
In our view, JAM offers investors a true ‘one-stop-shop’ for US equity investing, thanks to the active stewardship of its team, allowing it to proactively balance growth and value styles, while still maintaining a portfolio of high quality stocks. We believe that the active stewardship should reassure investors that despite JAM being a ‘core’ equity strategy, Timothy and Jonathan are still able to proactively position their portfolio around incoming market tailwinds.
JAM may be of particular interest to investors looking to replace their passive US exposure. Given JAM’s ex-ante (projected) beta of 1, combined with its very low OCF, investors could view JAM as an alternative to passive investing, managing a largely on-benchmark exposure while still having the benefits of active management and competitive fees.
As the JAM team point out, the future may also be conducive to a more balanced approach to US equity investing, rather than picking value or growth (which have outperformed during varying phases of the pandemic). The outlook for the US market is becoming less clear, with prevailing risk factors making it difficult to distinguish which factor will dominate. This means investors may be rewarded for cautiousness, something the managers certainly believe given their recent trades. As a result, an upwards trending yet risky market may actually be a tailwind for JAM’s relative performance, and would thus make its current discount an attractive entry point.
|Unique, blended approach to US large cap equities
||Gearing can amplify losses on the downside
|Historical outperformance of the broader US market, which is rare for a core strategy
||Can underperform during strong growth or value momentum
|Lowest OCF in the sector
||Higher volatility than the broader market