Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

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

Overview
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Overview

JPMorgan Claverhouse (JCH) has a straightforward mandate that requires all of its investments to be listed on the London Stock Exchange. This makes it relatively unusual in the UK Equity Income sector, where trusts often have some flexibility to invest overseas. This means that investors who share the managers’ belief that the UK stock market is cheap by international standards are getting an undiluted exposure through the trust. In the managers’ view, the UK market is at a ‘once in a generation’ valuation discount to the rest of the world.

JCH’s managers have established a very consistent track record of outperformance of their benchmark. In their words, this is a “get rich slow” strategy, in which their stock-picking process delivers steady incremental relative outperformance. For example, as we illustrate in Performance, JCH has outperformed in the six quarters since the pandemic crash.

The past 18 months is as good an illustration as any of why JCH suits long-term equity income investors. JCH’s status as an AIC ‘Dividend Hero’ (48 consecutive years of increases) is well known, but the rate of increase historically puts it ahead of most equity income rivals. As we discuss in Dividend, JCH’s shares offer a prospective yield 4.1%, compared to the benchmark yield of c. 3.1%

Analyst's View

The advantages of having a balanced barbell approach to portfolio construction, having exposure to both growth and value stocks, are typified by JCH’s performance since the pandemic induced market crash in Q1 2020. In a market that has seen several rotations between growth and value, it is no mean feat that JCH has outperformed in each quarter since then.

The investment process has delivered consistent, incremental outperformance and has now been afforded additional flexibility with a change to the risk management limits that allows the managers to express more conviction on individual stocks and sectors. When compounded, the high ‘batting average’ of outperformance means JCH has built up a strong long term track record.

Aside from outperformance, one of JCH’s key attractions is its dividend. As a ‘Dividend Hero’, the trust has an admirable record of growing its distributions. Whilst reserves supported last year’s dividend and may continue to do so this year, JCH’s revenues are bouncing back as we discuss in Dividend. The board have increased the quarterly interim dividends, and whilst the last decade’s dividend growth of 5.4% may not be matched this year, all the signs are that we can expect another year of an increased total dividend.

JCH’s shares trade on a small discount. With UK equity market valuations looking attractive compared to other equity markets, William and Callum’s track record of steady long-term outperformance make it a potentially attractive vehicle for investors wanting pure UK listed company exposure.

BULL BEAR
High dividend yield, with a strong track record of dividend growth, backed by a deep revenue reserve
Gearing higher than average for the sector, which can exacerbate downside (as much as amplify the upside)
Consistency of positive relative returns in recent years
Shares trade on a small discount; there is no guarantee the company will buy back shares when discount is wider than 5%
Portfolio balanced between growth and value, with UK market looking attractive by international standards
UK economy might not recover as fast as some expect
Continue to Portfolio
2022 Kepler Income & Growth Rated Fund

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

Fund History

27 May 2022 Fund Analysis
JCH’s steady and consistent dividend is complemented by the consistency of its relative performance…
11 May 2022 Catch a tiger by the tail
As inflation bites harder than it has for decades, we consider the best ways for investors to hang on to their capital...
15 Dec 2021 Dividends in the time of corona
Investment trusts have proven their worth during the pandemic, delivering dividend growth despite the turmoil…
24 Nov 2021 Fund Analysis
Steady outperformance and full exposure to the UK means JCH could be well-positioned for a second ‘Boris bounce’…
28 Apr 2021 The next value opportunity?
Two of our analysts debate whether Europe's improving vaccination programme will be the next opportunity for investors in their pursuit of returns...
24 Feb 2021 Fund Analysis
JCH’s FY 2020 dividend will increase by 1.7%, the 48th consecutive year of growth...
20 Jan 2021 Kepler's top-rated investment trusts for 2021
We update our annual quantitative ratings for investment trusts…
23 Nov 2020 Fund Analysis
JCH has bounced back from COVID-19 losses, and yields 4.9%…
05 Jun 2020 Deep impact
Audio and presentations from our conference this week, where fifteen of the world's best fund managers described a profoundly altered investment landscape...
13 May 2020 Braving the new world
Join 15 of the UK's best known fund managers at the Kepler Trust Intelligence Virtual Summit to find out how they see the world after the pandemic...
15 Apr 2020 Hold fast
Investment trusts' revenue reserves could make them a vital stronghold for investors facing UK dividend cuts of as much as 47%....
02 Apr 2020 Kepler Rated: JPMorgan Claverhouse
JCH has generated real dividend growth each year for two decades…
12 Mar 2020 The importance of buying earners*
Our analysis shows that the impact of dividend contributions on long term returns is anything but trivial...
20 Feb 2020 Fund Analysis
JCH has generated real dividend growth each year for two decades…
05 Dec 2019 Holding something in reserve
A sterling bounce poses a threat to UK dividends - we look at how UK equity income investment trust managers stand prepared…
02 Jul 2019 Fund Analysis
JPMorgan Claverhouse is a high conviction UK equity trust, which has handsomely outperformed its peers and index...
03 Oct 2018 We can be heroes
Our analysis has uncovered the trusts which have generated a solid income through thick and thin - without compromising other aspects of performance...
15 Aug 2018 The income edge
Last year saw investment trusts soar in popularity among both retail investors and wealth managers. We examine why this has happened, as well as the structural advantages of investment trusts for income-hungry investors...
13 Jun 2018 Still waters run deep
UK equity income trusts trade at a discount to their global-equity-income-focused counterparts, yet our research suggests this could be unjustified...
13 Jun 2018 Fund Analysis
JPMorgan Claverhouse invests in income-generating UK companies with a focus on those that provide consistent and growing dividends...
20 Nov 2017 Thin ice...
Our analysis shows the extent to which funds in the UK equity income sector are concentrated on just a few dividend paying stocks…
08 Nov 2017 Straight talking...
Bronwyn Curtis OBE, chairman of JPMorgan Asian, tells us why making the tough decisions and addressing the elephant in the room are her forte...
13 Sep 2017 Big Issue(rs)
We highlight the UK equity trusts that have issued and bought back the most shares over the course of 2017 so far and how these actions have affected shareholders...
12 Jun 2017 MAYDAY!
As the Conservative party founders, we examine the impact of last week’s disastrous election on trusts...
11 May 2017 Storm proofing...
Our research shows dividend cover among UK equity income trusts is at its highest level in decade...
31 Mar 2017 JPMorgan Emerging Markets Investment Trust
A large, well resourced trust offering very broadly diversified exposure to the world's emerging markets...
26 Apr 2016 Analysts welcome Mercantile results
Analysts at Winterflood Securities think The Mercantile Investment Trust is an attractive alternative for investors seeking smaller companies exposure on its current discount.
18 Mar 2016 Results roundup: Murray International and JP Morgan Claverhouse
Analysts at JPMorgan Cazenove say Murray International is through the worst after a strong start to the year, and JP Morgan Claverhouse remains a core holding for Winterflood Securities.
05 Feb 2016 Fund Analysis
A large cap focused trust with a high conviction stock picking approach, which aims to generate capital growth and income via a portfolio of UK equities.
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