Fund Profile

JPMorgan Asia Growth & Income 18 October 2021


Disclosure – Non-Independent Marketing Communication

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

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JPMorgan Asia Growth & Income (JAGI) aims to generate outperformance of Asian markets from a focus on long-term stock picking by a team of dedicated analysts located in the region. JAGI’s managers, Ayaz Ebrahim and Robert Lloyd, focus on identifying high-quality companies with long-term earnings growth prospects. The trust pays a dividend of 1% of NAV each quarter, using capital reserves where necessary so that Ayaz and Robert can focus on capital growth rather than generating an income.

The ability of the managers to focus on the best total return opportunities has helped the trust generate substantial outperformance of the MSCI AC Asia ex Japan benchmark over the long run, as we discuss under Performance. In the market sell-off since February, JAGI has slightly underperformed, with some of the biggest winners in recent years selling off the most in the pull-back. Having traded on a premium for most of the year, JAGI’s shares have slipped out to a discount of 8.2%.

Ayaz and Robert’s approach is focused on the long-term, and as a result, they have made minimal changes to their portfolio despite the volatility in their region this year. While the portfolio has greater exposure to growth companies and sectors than the typical equity-income fund (due to the managers not needing to earn a natural income), the greatest allocation is to what Morningstar deems core companies rather than growth or value (see Portfolio), and the balanced stylistic and sectoral exposures mean the trust has performed steadily through some quite violent rotations between growth and value.

Analyst's View

We think JAGI could serve as a core Asian exposure for either income or growth investors. The extensive resources the managers can call on in the region – 36 locally based analysts – and the strong, standardized analysis process with a focus on risks and earnings growth are attractive attributes for an active equity strategy. The focus on the long-term and on picking stocks rather than timing the market are disciplines that we think should serve an investor well over the long term and increase the chance of generating outperformance.

For income investors, one of the key attractions is diversification across various verticals. As well as the obvious geographical angle, JAGI’s ability to pay a dividend from capital means it can invest in low-yielding companies with great growth potential, offering income investors a way to enjoy their income without having to sacrifice capital growth. This contributes to a higher allocation to the information technology sector than the average UK equity income investor will likely have – although the structure of the Asian market also helps, as there are numerous high yielders in the Asian tech space too.

In the short term, Asia is facing some challenges, most notably from regulation in China and the country’s issues in the real estate and banking sector. We note the managers’ valuation signal warned at the start of the year that expected returns were low by historical standards. However, for a long-term investor, the current 8.2% discount could prove to be a good entry point, even if there could be more volatility to come in the short term.

bull bear
A substantial dividend yield not dependent on portfolio income
China is over a third of the benchmark, so investors take single-country risk
Exposure to growth companies and sectors not often offered by income funds
The willingness to hold expensive stocks could increase the sensitivity to a falling market
Strong and consistent track record of outperformance through stock selection
Active management can lead to periods of underperformance as well as outperformance
Continue to Portfolio

Fund History

07 Jun 2022 Results analysis: JPMorgan Asia Growth & Income
JAGI remains a strong option for Asia investors, despite current headwinds…
15 Mar 2022 Fund Analysis
JAGI’s managers think Asia can deliver in the future after recent market falls…
25 Jan 2022 Focus on the signal, not the noise
Asian stocks may have had a tough 12 months but that doesn’t mean investors should shun the region…
08 Dec 2021 Results analysis: JPMorgan Asia Growth & Income
JAGI’s dividends are at a record high…
24 Nov 2021 Why you should look at companies – not countries – in Asia
Expert investors in the region explain why it pays to ignore the headlines and focus on fundamentals...
18 Oct 2021 Fund Analysis
JAGI’s balanced exposures could suit it for a core role in a portfolio…
02 Jul 2021 Where Asia leads the world
The historic perception of Asian companies lagging their Western peers is being swept away by global leaders in their fields. Here, we discuss the drivers of this shift Eastward and a company that exemplifies this trend…
24 May 2021 Results analysis: JPMorgan Asia Growth & Income
JAGI has outperformed its benchmark on a share price and NAV basis over the six months to 31 March 2021, despite a rocky market environment…
27 Apr 2021 Not the usual suspects
Investors are increasingly seeking a combination of growth and income but with dividends under pressure on the UK and Europe, it makes sense to consider your options further afield…
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…
25 Mar 2021 Fund Analysis
JAGI offers a high dividend from a growth-oriented portfolio…
20 Jan 2021 Kepler's top-rated investment trusts for 2021
We update our annual quantitative ratings for investment trusts…
07 Oct 2020 Fund Analysis
JAGI is the top-performing Asia income trust over five years…
24 Sep 2020 Bull in the Chinese market?
The Chinese stock market has been a notable winner thus far in 2020. Should investors stay the course, or take profits?
15 Apr 2020 Kepler Rated: JPMorgan Asia Growth & Income
JAGI offers a high yield and exposure to high growth companies in Asia…
11 Mar 2020 Fund Analysis
JAGI has generated significant outperformance in recent years and offers an attractive yield…
27 Feb 2020 Robbing Peter to pay Paul?
Two of our analysts discuss the growing trend for companies to pay an income out of capital…
21 Aug 2019 All change: a closer look at the AIC's revised sectors
We examine the AIC's revised sector classifications and discuss whether further improvements could be made...
03 Jul 2019 Push-me pull-you
Two contrasting influences are dominating the outlook for Asian markets - we analyse them and how Asia trusts are positioning their portfolios in response...
02 Jul 2019 Fund Analysis
With a team-based approach, JPMorgan Asian has outperformed in each calendar year since 2015...
05 Dec 2018 Surf's up
As rough markets drive share price volatility up, we use a proprietary statistical technique to highlight trusts which are on unusually wide discounts...
04 Dec 2018 Fund Analysis
Recent performance has been impressive, with the trust outperforming in rising and falling markets...
10 Oct 2018 Information overload
Our analysis shows the long term case for emerging markets remains largely unaffected by much of the negative newsflow surrounding the sector...
17 May 2018 Fund Analysis
A low cost trust with a yield of 4.1%, putting it on a competitive footing versus its income focused peers...
17 May 2018 Blast off!
As China A-Shares join the global indices, many investors remain structurally underexposed to this exciting region...
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