Fund Profile

JPMorgan UK Smaller Companies 23 December 2020


Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by JPMorgan UK Small Cap 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.

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JPMorgan Smaller Companies Trust (JMI) offers investors access to some of the fastest growing and innovative companies in the UK. JMI’s managers believe these companies should be able to grow regardless of the state of the general economy, particularly relevant to the UK’s current situation.

The trust is managed by Georgina Brittain and Katen Patel, who employ a bottom-up stock picking approach, aiming to take advantage of valuation inconsistencies within the smaller companies sector. Quality, value and momentum are the characteristics that drive stock selection, contributing to a diverse portfolio of around 90 stocks.

Both short term and long term performance has been excellent, with the trust outperforming the benchmark over one, three and five years. The last year has been particularly eventful, with the first six months showing both strong absolute and relative performance, buoyed by the removal of political uncertainty and the belief that the Conservative government would boost the economy. This was then stopped in its tracks by the outbreak of the coronavirus and its impact on the economy. The smaller companies sector was badly hit, particularly in terms of widening discounts and portfolio performance. Despite this, as we discuss in the Performance section, JMI achieved a creditable outcome and managed to outperform the benchmark and peers.

The trust, despite its continuing outperformance of benchmark and peer group, trades on a discount of 4.3%.

Analyst's View

JMI has been one of the most consistent performers in the smaller companies sector, delivering first quartile performance over one, three and five years. In fact, in 2019 the trust was one of the strongest performers in the entire investment trust universe.

Due to the ability of smaller companies to grow regardless of the wider economy, there is a strong case that the trust can continue to perform strongly regardless of the impact of the pandemic. This is also supported by the managers’ focus on finding high quality companies which should be more resilient to tough economic times.

Furthermore, the managers’ vast resources give them an advantage in understanding companies in detail over smaller asset managers. We believe this has been demonstrated in 2020 with the trust holding up better than peers and the benchmark due to their capacity to understand the impact of COVID-19 on cash flows and balance sheets.

Although having narrowed considerably recently, we still believe the current discount of 4.3% could be interesting given the consistent performance and tilt towards quality.

Excellent long and short term performance
Gearing can increase the volatility of the trust
The vast resources of JPMorgan give the managers an advantage in understanding companies
After the sizeable correction, it might take time for investors to recover their appetite for small caps
Trading at a discount to NAV despite exceptional performance
Uncertainty surrounding Brexit remains
Continue to Portfolio

Fund History

13 Jul 2024 Ch-ch-ch-changes
Politics isn’t the only place where there are big changes at the top, but for shareholders change is often a good thing…
10 Jul 2024 Things can only get better
Discounts are yawning but markets are thawing and boards are on the offensive; Labour might not be the only thing making a comeback this year...
14 Jun 2024 Three ‘chiers’ for Macron
Whatever the outcome of the French president's gamble, turgid politics in Europe have far-reaching implications for investors…
25 Jan 2024 Fund Analysis
JMI’s proposed combination with JMF will offer investors a range of potential benefits…
10 Jan 2024 Definitely maybe
Fund flows and discounts may shed some light on a once-in-a-generation opportunity…
13 Jul 2023 Video interview with JMI Manager Georgina Brittain
We talk valuations, M&A and the attractions of UK small caps...
25 Apr 2023 Fund Analysis
Macro concerns have knocked JMI to a discount, despite the managers’ strong long-term performance…
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..?
18 Jan 2023 Fortune favours the brave
Our research suggests a recession has already been priced into small cap trusts, but risks abound...
11 Jan 2023 Solving the Rubik’s Cube
We reveal the winners of our investment trust ratings for 2023…
06 Jul 2022 Fund Analysis
JMI’s widening discount may be an attractive entry point into the best-performing UK small-cap trust over the long term…
22 Jun 2022 Spider's web
We outline our new quantitative system for mapping the crucial performance characteristics of investment trusts…
16 Feb 2022 Perfectly formed
Our research suggests that investment trusts really are a better way to gain exposure to smaller companies…
16 Feb 2022 How keeping disciplined pays off in the small cap market
JMI’s track record shows why keeping grounded pays off in a market full of opportunity…
05 Jan 2022 Kepler’s top-rated trusts for 2022
We unveil the winners of our ratings for 2022 in the Growth, Income & Growth and Alternative Income categories…
13 Oct 2021 Results analysis: JPMorgan UK Smaller Companies
JMI has built on its excellent track record, taking a balanced approach to a dynamic asset class…
13 Oct 2021 Look beyond the recovery trade to find tomorrow’s large caps today
While the re-opening trade has fuelled UK smaller companies in 2021, there is more to the story for the domestic economy. Here, we discuss three companies that the team at JPMorgan UK Smaller Companies Investment Trust (JMI) believe could flourish into the future…
21 Jul 2021 UK smaller companies set for long-term success
Hopes are high for the UK’s economy and particularly UK stocks, given their relatively low valuations, as we begin to pick up the pieces after the COVID crisis, and the outlook for UK smaller companies is optimistic. However, a considered approach is key to avoid simply following the crowd…
08 Jul 2021 London Calling
UK equities represent a ‘once in a generation’ opportunity for investors according to the managers who joined us to discuss the outlook at our event last week…
07 Jul 2021 Slides and Audio: JPMorgan Smaller Companies
Download the presentation and listen to the audio from our 'Cool Britannia' Summer conference on 01 July...
07 Jul 2021 Slides and Audio: Roundtable - Small is beautiful
Download the presentation and listen to the audio from our second roundtable discussion with Dan Whitestone, Georgina Brittain and Judith MacKenzie...
23 Jun 2021 Time to back Britain?
After a challenging period for the United Kingdom, we wonder if it could be the most exciting market on a five-year view…
09 Jun 2021 Cool Britannia?
Join the team at Kepler Trust Intelligence and six leading UK fund managers as we examine the prospects for UK equities with COVID in retreat and Brexit uncertainty finally behind us…
21 May 2021 Fund Analysis
JMI has a strong long-term track record of outperformance...
22 Apr 2021 Tapping into the UK smaller companies revival
A year ago, the outlook seemed not far off dire for UK smaller companies...
25 Mar 2021 Results analysis: JPMorgan Smaller Companies
JMI continues to be a compelling proposition for investors even on a tighter discount, after releasing a strong set of half-year results this morning…
06 Jan 2021 This time next year Rodney...
We review the performance of the team’s ‘top picks’ for 2020 – including some proper plonkers – and place our bets for the year ahead…
23 Dec 2020 Fund Analysis
One of the strongest performing trusts in 2019, we look at JMI and the portfolios continued outperformance of the benchmark and peers…
22 Jul 2020 A game of four quarters
Seven trusts, two quarters. Are our team still happy with their trust picks for 2020?
27 Feb 2020 Fund Analysis
After an extraordinary 2019, JMI has seen its discount once more slip, offering a potentially attractive entry point…
02 Jan 2020 Crystal Balls
Drunk on our success in choosing funds to perform well in 2019, the team at Kepler Trust Intelligence is back at the table with a glint in its eye…
07 Aug 2019 Fund Analysis
The managers of JPMorgan Smaller Companies apply a clear, consistent process to UK smaller companies to produce consistent returns...
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