Fund Profile

JPMorgan China Growth & Income 10 February 2021


Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by JPMorgan China 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 China Growth & Income (JCGI) invests in a portfolio of high growth companies listed in onshore China, Hong Kong and Taiwan. JCGI pays a dividend of 4% in quarterly installments almost entirely out of capital, as the managers focus on generating high total returns by investing in secular growth themes in China.

The trust has generated a high absolute return and significant excess return against the local markets in recent years, as we discuss in the Performance section. Investments in information technology, ecommerce and the expansion of financial services and consumer goods have been key drivers, as well as holdings in innovative companies in the healthcare and electric vehicle fields. Even after such a strong run, the managers believe the potential returns for investing in their portfolio are very high, with a forecast total shareholder return in low double digits over the next five years based on their fundamental analysis.

JCGI is managed by Howard Wang, Rebecca Jiang and Shumin Huang, who draw on the work of 11 other Chinese specialists in the Emerging Markets and Asia Pacific Equities Team. This team is based in Hong Kong and brings significant local knowledge and many years of experience. They currently cover 280 onshore-listed Chinese companies, and this coverage will be deepened by the team of 20 analysts in the Shanghai-based CIFM once the purchase of the latter by JPM has been finalised. This broader team should allow even greater coverage of the small and mid-cap space in onshore China, increasing JPM’s advantage in this space.

Following the implementation of the new dividend policy and a return of risk appetite to markets in Q4 2020, JCGI’s shares trade on a small premium to NAV of 1.7%, as we discuss in the Discount section.

Analyst's View

JCGI offers a combination of growth potential and a regular dividend, the attractiveness of which to many investors is in our view a key support behind its premium rating. The trust has had a remarkable 12 months, with shares having more than doubled. Nevertheless, we take comfort from the managers’ confidence in the growth potential in their portfolio. Even if the last year’s returns are unlikely to be repeated, the secular growth themes in the portfolio could be set for significant further expansion, thanks to the relatively low penetration of services such as cloud computing, electric vehicles and sophisticated healthcare and the opening up of new markets by China’s innovative companies.

The Chinese market is undergoing rapid change, opening up to foreign capital and becoming more sophisticated and deep with opportunities. The huge resources brought to bear by the EMAP team, with the additional onshore presence to come on board too, means JCGI should be able to offer access to the growth companies of the future as well as the existing, widely-owned giants such as Alibaba and Tencent. JCGI offers investors a way to access this potential growth while also receiving a yield, rather than investing in the low growth companies which typically offer a natural income this high.

bull Bear
Large, experienced local team providing potential edge in research into mid and small caps
Tendency to be geared increases sensitivity in falling markets
Offers predictable dividend, without having to invest in low growth high-yielders
Single country funds bring increased political risk, for China in particular
Excellent track record of relative performance
Expensive near-term valuations mean team’s assessment of high earnings growth must be met
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2024 Kepler Income & Growth Rated Fund

This trust has been awarded a rating by Kepler Trust Intelligence for income & growth... Find out more

Fund History

24 Jan 2024 Share the wealth, Xi...
The world's most successful communist country could benefit from a decent welfare state...
17 Jan 2024 Top of the Pops
We reveal the winners of our investment trust ratings for 2024…
16 Aug 2023 Fund Analysis
JCGI’s managers expect handsome long-term returns from their portfolio after last year’s sell-off…
02 Mar 2023 The Devil’s in the demographics
China’s population is in decline - should it turn east or west for inspiration..?
25 Jan 2023 The toad to recovery
Two of our analysts debate the outlook for China in 2023…
11 Jan 2023 Solving the Rubik’s Cube
We reveal the winners of our investment trust ratings for 2023…
28 Dec 2022 Fund Analysis
JCGI is well-positioned for China’s reopening over the short term and the economy’s transition over the long term…
02 Nov 2022 The stability dividend
Our analysis shows that trusts paying a regular income suffer less discount volatility...
20 Jul 2022 Ingredients for success
We identify several less conventional trusts that offer strong sources of diversification to major indices…
25 May 2022 Bull in a China shop
Chinese stocks are looking cheap, and we argue that now may be a good time to allocate more to China for the long-term...
04 May 2022 Time to change the record
We ask whether equities can still offer meaningful diversification or whether investors need to turn to alternatives…
20 Apr 2022 Fund Analysis
JCGI gears up for the long-term...
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 Beyond the Middle Kingdom
As momentum falters in the emerging markets powerhouse, we examine the options for investors outside China...
13 Oct 2021 Fund Analysis
JCGI has delivered exceptional long-term performance…
29 Sep 2021 Slings and arrows
Our analysts argue over whether it’s better to take arms against volatility in a portfolio, or to simply suffer it…
10 Feb 2021 Fund Analysis
JCGI offers exciting growth potential from Chinese large and mid-caps with a high and predictable dividend…
20 Jan 2021 Kepler's top-rated investment trusts for 2021
We update our annual quantitative ratings for investment trusts…
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?
17 May 2018 Fund Analysis
JPMorgan Chinese is an actively managed portfolio of stocks listed in China, including Hong Kong, and Taiwan...
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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