Fund Profile

JPMorgan European Growth & Income 10 July 2024

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
JEGI provides core exposure to a region essential to any portfolio...
Overview

JPMorgan European Growth & Income (JEGI) provides investors with an active large-cap European equity portfolio and could be considered a core holding. The trust has built a good track record of outperformance over the last five years, a period marked by some dramatic shifts in market conditions, and scores well in our consistency analysis highlighted in the Performance section.

The trust simplified its structure in 2022 and JEGI's current strategy is the same as the previous growth share class and the track record can be considered continuous. At the same time, JEGI adopted a Dividend strategy that uses a mixture of current income and reserves to pay a dividend equivalent to 4% of NAV each year, in equal quarterly instalments, with dividends for the year to 31/03/2025 set at a total of 4.8p.

While the last two years have seen investment trust sector discounts widen significantly, JEGI has seen its discount narrow to a position where it is much closer to the peer group average, helped in our view by the simplification of the structure, the dividend policy and the good performance record, together with an active share buyback programme, which is analysed in the Discount section. The trust also has a continuation vote in 2027 which will only be triggered should JEGI underperform its benchmark over five years. At the time of writing JEGI is comfortably ahead of this hurdle, detailed in the Performance section.

JEGI is managed by the team of Alexander Fitzalan Howard, Zenah Shuhaiber and Timothy Lewis: Alexander has managed JEGI for the last 18 years and has been with JPMorgan for over 37 years. Zenah and Timothy both joined Alexander in the JEGI team three years ago, both having had long careers at JPMorgan prior to this.

Analyst's View

While we wouldn't instinctively apply the word 'contrarian' to a decision to buy European equities, the long-term fund flows chart in the Discount section seems to suggest that the consensus has been against Europe for some time, with even 2023's excellent recovery for the index, which JEGI comfortably outperformed, not proving tempting enough for investors to allocate capital to European equity funds. And yet some of the stand-out performers last year were European companies, many of which feature in JEGI's portfolio.

In the meantime, JEGI has clocked up an excellent record of outperformance over five years and since its reconstruction in 2022, while paying a dividend equivalent to 4% of NAV each year. The discount has, on average narrowed since the reconstruction , and the board has stepped in with share buybacks on a consistent basis. JEGI's portfolio is positioned quite positively with a bias to some cyclical sectors, albeit ones with underlying long-term positive trends, such as semiconductors, software, services, and discretionary retail. In our view, last year saw a recovery for European equities despite negative investor sentiment towards Europe as implied by fund flows, meaning that there is significant potential for further upside if sentiment changes. JEGI is still on a relatively wide discount and combined with its pro-cyclical stance, could be a major beneficiary of such a shift.

Bull

  • JEGI is at a wider discount than the peer group average
  • An end to weak investor sentiment toward Europe could be very positive
  • Allows income investors to diversify with a European growth portfolio

Bear

  • Dividends paid from capital may not suit all investors
  • Weak sentiment could, however, persist for some time
  • JEGI's gearing can amplify losses as well as gains
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

17 Jul 2024 Balancing act
We ask why trusts with a more flexible approach have outperformed…
10 Jul 2024 Fund Analysis
JEGI provides core exposure to a region essential to any portfolio...
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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