JPMorgan Global Growth & Income 11 November 2022

JPMorgan Global Growth & Income (JGGI) takes a high-conviction approach to investing in the broad and diversified global equity markets, the managers selecting from the best ideas of JPMorgan’s huge equity research platform in order to provide a balanced core portfolio. The structure of the trust is designed to deliver both capital growth and income to investors while affording the managers full freedom to implement their investment approach. JGGI recently completed a merger with Scottish Investment Trust (SCIN) on 01/09/2022, which saw net assets grow from £723m to £1.3bn, leading to JGGI’s graduation to the FTSE 250 Index and a reduction in Charges. On 27/10/2022 JGGI’s board published proposals to merge with JPMorgan Elect, which would be completed on similar terms and see net assets grow to above £1.7bn (using 25/10/2022 valuations).

There has been no change to the investment approach, JGGI’s portfolio continuing to be managed by Helge Skibeli, Rajesh Tanna and Timothy Woodhouse, who remain focussed on delivering superior returns to the benchmark MSCI All Country World Index. The Dividend policy means the board has committed to pay out 4% of the financial year-end NAV as a dividend, using capital if necessary. As discussed under Portfolio, this affords the managers the freedom to invest wherever they see the best total returns without yield, i.e. in lower-income-producing but growthier companies which are often off limits to their equity income peers.

As a result, JGGI has performed well over five years whilst also delivering a yield to investors, achieving a total return of 60.4%, compared to the global equity income peer group’s 33.1% and the MSCI All Country World Index benchmark’s 45.6%.

The trust is currently trading at a Discount of 2.5%, significantly off its five-year average premium of 2.1%.

JGGI’s investment strategy is unchanged following the merger with SCIN, and the trust remains one of the more diversified options within the global growth and income sector. This can be attributed to the managers’ ability to invest across a more diversified universe of stocks due to the revenue and capital account being used to finance a dividend of 4% of financial year-end NAV. This can result in some level of dividend volatility, and in times of uncertainty may restrict dividend progression. However, we believe the strong long-term performance of the trust, which benefits from the ability to capture the capital growth generated by some lesser-featured names in the global equity income space, more than compensates for this. This is testament to the managers’ ability to gradually shift the portfolio towards a more ‘core’ offering.

The reduction in charges has also been a major benefit for the trust, along with the additional visibility, liquidity and opportunities that its inclusion in the FTSE 250 Index will provide. We believe that the current discount level is in part reflective of the perceived uncertainty around the merger and short-term adjustment to ownership. This may therefore offer an opportune entry point for longer-term investors.