Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by JPMorgan MidCap. 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 Mid Cap Investment Trust (JMF) aims to generate long-term capital growth from investment in a portfolio of UK mid-cap stocks. Managed by Georgina Brittain and Katen Patel, the trust looks to identify structural winners in the mid-cap market and utilises a stylistically blended approach which combines qualitative and quantitative elements.

As we discuss under Portfolio, the managers seek to identify companies with a combination of quality, value and operational momentum characteristics. They believe this approach to be particularly well suited to the mid-cap market, given the lower levels of broker coverage of most stocks potentially giving rise to a greater number of mispriced opportunities or underappreciated growth opportunities. Given the exceptional economic backdrop seen in 2020 thus far, Georgina and Katen have been very much focussed on ensuring JMF remains concentrated in the greatest growth opportunities at this time, in companies which stand to benefit from the ongoing and anticipated operating environment.

JMF is currently trading on a discount of over 14% (as at 25/08/2020). As we discuss under the Performance and Discount sections, this level of discount is wide relative to the trust’s history under the current management team.

Although JMF is primarily focussed on generating capital growth, the board has also aimed to increase the dividend in excess of inflation. As we cover in the Dividend section, JMF currently yields c. 3.3% on a historical basis. With substantial revenue reserves, the board should have capacity to grow the dividend in the current financial year even if underlying income is impaired.

Analyst's View

Georgina and Katen have demonstrated the ability to add value over the benchmark through stock selection over the long term. Given the current economic situation, the focus on quality and resilience is welcome, whilst the relatively wide discount relative to the trust’s own history gives us a good idea of general sentiment towards the sector. In the short term, we think that relative returns are likely to remain strongly influenced by perceptions of economic performance and future policy support, as well as by company fundamentals.

We think the portfolio’s current tilt towards cyclicality makes sense as a reflection of the relative valuations available, but perceptions that systemic risks are growing and/or of rising insolvency risks could be a headwind to this position in the short term. This is probably true, irrespective of the quality of underlying balance sheets: rock-solid companies in sectors deemed at risk from a weak recovery will likely be hit by any disappointing economic data, irrespective of the impact on their fundamental outlook.

However, for investors willing to look through any short-term volatility, the discount at this level could represent an attractive entry point for UK investors. With a reasonable yield which is well supported by revenue reserves, shareholders can reasonably expect dividends to cushion any short-term share price volatility in total return terms.

bull bear
Strong long-term track record Could struggle if economic risks are perceived to rise
Discount at this level has historically represented an attractive entry point After sizeable shock, may take some time for market to recover risk appetite for mid caps
Experienced team with significant analytical resources available to them Gearing can exacerbate downside as well as amplify upside
Continue to Portfolio

Fund History

30 Aug 2023 UK OK, HUN?
Sentiment towards the UK is at rock bottom, which means only one thing…
13 Apr 2023 Far from the madding crowd
Smaller nimble companies, both public and private, may be best placed to navigate the current environment…
06 Apr 2023 Fallen Kingdom?
Since the UK was described as a ‘Jurassic Park’ stock market, it has outperformed. Is this a new age for the stock market..?
30 Mar 2023 What I’m doing with my allowance this tax year
Two of our analysts debate whether to invest in punchier funds for the long term or take a more cautious view…
28 Feb 2023 Fund Analysis
JMF could be poised to capture a market bounceback…
22 Sep 2022 Fund Analysis
JMF has a powerful combination of performance drivers…
24 Nov 2021 Fund Analysis
Despite strong recent performance and excellent long-term track record, JMF is trading at a wide discount…
11 Aug 2021 In at the deep end
Does seeking out wider-than-usual discounts help investors systematically outperform in the UK trust space?
02 Jun 2021 Fortune favours the brave (sometimes)
Our research suggests wide discounts often herald high NAV returns too…
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...
25 Mar 2021 Fund Analysis
Despite a strong long-term track record, JMF is currently on a wide discount…
10 Sep 2020 Fund Analysis
JMF uses quant research and fundamental analysis to take advantage of investor psychology and market inefficiencies...
28 May 2020 Kepler Rated: JPMorgan Mid Cap
JMF uses quant research and fundamental analysis to take advantage of investor psychology and market inefficiencies...
18 Mar 2020 Fund Analysis
JMF uses quant research and fundamental analysis to take advantage of investor psychology and market inefficiencies...
17 Jul 2019 Ready for action
In the second part of our active management series, we assess the most active managers across the major closed-ended equity sectors…
10 Jul 2019 Fund Analysis
JMF uses quant research and fundamental analysis to take advantage of investor psychology and market inefficiencies ...
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