Fund Profile

JPMorgan European Growth & Income 08 April 2022

Disclaimer

Disclosure – Non-Independent Marketing Communication

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

Overview
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Overview

JPMorgan European Growth & Income (JEGI) has been formed by the merger of JPMorgan European Growth (JETG) and JPMorgan European Income (JETI). Under the management of Alexander Fitzalan Howard, Zenah Shuhaiber and Timothy Lewis, JEGI offers investors the benefits of a ‘core’ European equity allocation coupled with an attractive dividend profile. JEGI’s portfolio is managed for growth, but it will also pay out 4% of its NAV as a dividend each year (from capital where necessary), allowing it to provide a yield which is competitive with that formerly provided by JETI.

The team utilise an investment process which focusses on evaluating a company’s quality, valuation and momentum characteristics, as we describe in the Portfolio section. Over the last year or so, the team have been actively tilting the portfolio towards cyclical sectors in order to capitalise on Europe’s economic reopening.

Over the long term JEGI’s predecessor trust has outperformed its benchmark, yet it is over the last 12 months that the team’s balanced approach has truly shone. JEGI has not only outperformed relative to its benchmark during this period, but has also generated an NAV Performance much greater than its peer group average, achieving a positive return during a painful period for many of its peers, driven by the team’s recognition of the mis-pricing in cyclical stocks.

JEGI currently trades on a 12.9% discount, wider than both its peer group average and the c. 11% discount which JETG and JETI traded on prior to the merger. While JEGI’s current discount reflects the unique risks European markets currently face, under the new structure the board will aim to keep JEGI within a single-figure discount. The board has also implemented a revised Charges schedule, whereby the trust will see a substantially reduced management fee.

Analyst's View

The merger of JETG and JETI is, in our view, a net positive for their shareholders. Since the advent of the pandemic in March 2020 markets have been something of a roller coaster, favouring a range of different investment styles at any given moment. Recent performance demonstrates the advantages of a more balanced approach to investing, such as that employed by JEGI, which is better able to benefit through varying market environments.

While growth investors will benefit from the increased scale, discount controls and lower costs of JEGI, we believe it is the income investors who will benefit most. Under the new mandate investors will continue to benefit from a highly competitive yield, but will now also have the benefit of a much more flexible investment approach, freed from the restriction of an explicit income mandate (with JEGI arguably being a better use of the investment trust structure).

JEGI’s core approach may become all the more relevant in the near term, as European markets are gripped by both increasing inflation and rising geopolitical tensions. Thanks to JEGI’s more modest valuations when compared to its peers, and the team’s flexibility to adapt their portfolio to varying valuations and themes, it may be well positioned to weather the current market climate – as suggested by JEGI’s recent good performance.

Bull

  • Combines an attractive yield with a consistent investment process
  • Current discount may offer an attractive entry point, and may narrow under new policy
  • Lower fees and new redemption clause are more aligned with shareholder interests

Bear

  • Gearing can enhance losses on the downside
  • Dividend cannot be guaranteed to be progressive
  • Europe is currently facing heightened geo-political risks
Continue to Portfolio
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

15 May 2024 Why'd you have to go and make things so complicated?
European growth may be more complicated, and positive, than we suspected...
17 Jan 2024 Top of the Pops
We reveal the winners of our investment trust ratings for 2024…
12 Sep 2023 Fund Analysis
JEGI: performing well even as investors remain underweight European equities...
21 Jun 2023 Ça plane pour moi
Some of the world's biggest companies are doing just fine in Europe, yet investors shun the region. Time for a rethink...
17 Mar 2023 A feast for your ISAs – the second course
Dividends, UK small caps, energy and more…
14 Mar 2023 JPMorgan European Growth & Income - Income and growth without compromise
Zenah Shuhaiber
Rewatch this webinar from our month-long online series 'A feast of ideas for your ISA' hosted by the team at Kepler Trust Intelligence throughout March...
Watch Recording
02 Mar 2023 The Devil’s in the demographics
China’s population is in decline - should it turn east or west for inspiration..?
28 Feb 2023 Fund Analysis
JEGI is a core European equity trust designed for all weathers…
17 Feb 2023 A brighter 2023 for European equities
Companies on the continent may have reason to feel cautiously optimistic…
11 Jan 2023 Solving the Rubik’s Cube
We reveal the winners of our investment trust ratings for 2023…
29 Nov 2022 Results analysis: JPMorgan European Growth & Income
JEGI’s new structure offers an attractive combination of income and growth potential…
02 Nov 2022 The stability dividend
Our analysis shows that trusts paying a regular income suffer less discount volatility...
20 Oct 2022 Cold winter, bright future
JEGI is well positioned to benefit from any long-term improvement in Europe’s fortunes…
15 Jun 2022 Staying active
We highlight several alternatives to passive investments for investors looking for core exposure in uncertain markets...
14 Jun 2022 Results analysis: JPMorgan European Growth & Income
Major structural changes will make JEGI an appealing core holding for investors of all stripes…
10 Jun 2022 The devil is in the details
JEGI has made some very favourable changes for shareholders…
08 Apr 2022 Fund Analysis
The newly established JEGI offers investors an attractive combination of a high dividend with a core European equity portfolio…
18 Jun 2020 Gimme shelter
As income investors brace for impact we ask which regions and trusts are less likely to cut their dividends in 2020…
09 Oct 2019 Fund Analysis
One of the only income vehicles across the European universe, JETI offers UK investors a unique way to diversify their income…
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