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Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by JPMorgan Claverhouse. 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 Claverhouse (JCH) invests solely in the UK equity market. The trust has an enviable track record of dividend growth which now stands at 47 consecutive years, and it is the only UK equity income ‘dividend hero’ (a trust which has raised its dividend every year for 20 or more years) to have achieved dividend growth ahead of inflation in every year of the past two decades.

Managed by the highly experienced William Meadon and (since January 2018) Callum Abbot, the investment process emphasises a bottom-up stock-picking approach. When William took over the trust in 2012, he enacted a slight evolution in the strategy to make it more concentrated than it had been historically. The portfolio will typically hold between 60 and 80 stocks, and is currently at the lower end of that range. The managers remain bullish on the prospects for the UK market and this is reflected in the current gearing level.

JCH is described by its managers as a ‘get rich slow’ strategy, aiming for consistency of outperformance with as few surprises as possible for investors. Certainly, the stock-picking approach has paid off for investors over the long term – JCH has outperformed in 70% of quarterly periods since William took the reins. The cumulative effect of this is that returns have been strong relative to the FTSE All-Share.

The shares currently yield c. 3.8% and, with ample revenue reserves, the team are confident the fund can continue its track record of providing inflation-beating dividend increases in the coming years. The board has taken a more active approach to discount control in recent years, and JCH currently trades on a discount to NAV of 1.9%.

Analyst's View

JCH offers an attractive level of dividend with a strong track record of dividend growth. The substantial revenue reserves mean it is highly possible (although by no means guaranteed) that the trust will continue to grow distributions for the foreseeable future. In the immediate term, this year the trust’s revenue account is likely to benefit from twin tailwinds of lower interest costs as well as a 10% management fee reduction.

Combined with the prospect for attractive dividend growth, the managers have demonstrated that their stock-picking approach (within a strong risk framework) has delivered consistent outperformance relative to the benchmark. Gearing has been employed intelligently – as witnessed by the adroit positioning prior to, and during, the Q4 equity market fall.

The UK equity market offers some excellent global companies, arguably at a significant discount to international peers thanks to the political uncertainty surrounding Brexit. The managers have therefore been positioning the JCH portfolio to benefit from this. The barbell approach of owning some high-dividend payers and some low payers with better growth prospects, and the desire to own a portfolio of companies that ‘move to different beats’, means that the portfolio should not be overly exposed to market rotations or changes in style (e.g. growth/value leadership).

The trust currently trades at a small discount to NAV. We believe that entry at these levels could be attractive for a core UK exposure with a strong track record of index-beating returns.

bull bear
Strong track record of dividend growth, backed by a deep revenue reserve Though growing, yield is not particularly high
Consistency of positive relative returns in recent years Higher OCF than peer group, although fee reductions should mitigate this somewhat
Management fee being reduced going forward Gearing can exacerbate the downside (as well as amplify the upside)
Continue to Portfolio

Fund History

17 Apr 2024 Pretty, pretty, pretty good
Do investment trusts really protect capital and income against inflation? Let's take a look…
13 Dec 2023 In-come all ye faithful
Equity income could be a beneficiary of the higher interest environment, with trusts a good way to capture it…
04 Oct 2023 To gear, or not to gear...
We examine the impact that rising rates have had on fund managers' appetite for gearing as a means to spice up returns...
18 Sep 2023 Fund Analysis
JCH’s consistency and pure UK equity exposure mark it out from its peers…
16 Mar 2023 Diversity matters
We examine the effect of blending multiple funds within your regional allocation and find that – while the culture wars may rumble on elsewhere – the benefits of diversity for investors are unarguable…
09 Feb 2023 Fund Analysis
JCH is on track for half a century of consecutive dividend growth…
26 Oct 2022 Money for nothing
Debt measured at fair value has had a positive impact on NAV returns for a number of investment trusts this year...
27 May 2022 Fund Analysis
JCH’s steady and consistent dividend is complemented by the consistency of its relative performance…
11 May 2022 Catch a tiger by the tail
As inflation bites harder than it has for decades, we consider the best ways for investors to hang on to their capital...
15 Dec 2021 Dividends in the time of corona
Investment trusts have proven their worth during the pandemic, delivering dividend growth despite the turmoil…
24 Nov 2021 Fund Analysis
Steady outperformance and full exposure to the UK means JCH could be well-positioned for a second ‘Boris bounce’…
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...
24 Feb 2021 Fund Analysis
JCH’s FY 2020 dividend will increase by 1.7%, the 48th consecutive year of growth...
20 Jan 2021 Kepler's top-rated investment trusts for 2021
We update our annual quantitative ratings for investment trusts…
23 Nov 2020 Fund Analysis
JCH has bounced back from COVID-19 losses, and yields 4.9%…
05 Jun 2020 Deep impact
Audio and presentations from our conference this week, where fifteen of the world's best fund managers described a profoundly altered investment landscape...
13 May 2020 Braving the new world
Join 15 of the UK's best known fund managers at the Kepler Trust Intelligence Virtual Summit to find out how they see the world after the pandemic...
15 Apr 2020 Hold fast
Investment trusts' revenue reserves could make them a vital stronghold for investors facing UK dividend cuts of as much as 47%....
02 Apr 2020 Kepler Rated: JPMorgan Claverhouse
JCH has generated real dividend growth each year for two decades…
12 Mar 2020 The importance of buying earners*
Our analysis shows that the impact of dividend contributions on long term returns is anything but trivial...
20 Feb 2020 Fund Analysis
JCH has generated real dividend growth each year for two decades…
05 Dec 2019 Holding something in reserve
A sterling bounce poses a threat to UK dividends - we look at how UK equity income investment trust managers stand prepared…
02 Jul 2019 Fund Analysis
JPMorgan Claverhouse is a high conviction UK equity trust, which has handsomely outperformed its peers and index...
03 Oct 2018 We can be heroes
Our analysis has uncovered the trusts which have generated a solid income through thick and thin - without compromising other aspects of performance...
15 Aug 2018 The income edge
Last year saw investment trusts soar in popularity among both retail investors and wealth managers. We examine why this has happened, as well as the structural advantages of investment trusts for income-hungry investors...
13 Jun 2018 Still waters run deep
UK equity income trusts trade at a discount to their global-equity-income-focused counterparts, yet our research suggests this could be unjustified...
13 Jun 2018 Fund Analysis
JPMorgan Claverhouse invests in income-generating UK companies with a focus on those that provide consistent and growing dividends...
20 Nov 2017 Thin ice...
Our analysis shows the extent to which funds in the UK equity income sector are concentrated on just a few dividend paying stocks…
08 Nov 2017 Straight talking...
Bronwyn Curtis OBE, chairman of JPMorgan Asian, tells us why making the tough decisions and addressing the elephant in the room are her forte...
13 Sep 2017 Big Issue(rs)
We highlight the UK equity trusts that have issued and bought back the most shares over the course of 2017 so far and how these actions have affected shareholders...
12 Jun 2017 MAYDAY!
As the Conservative party founders, we examine the impact of last week’s disastrous election on trusts...
11 May 2017 Storm proofing...
Our research shows dividend cover among UK equity income trusts is at its highest level in decade...
31 Mar 2017 JPMorgan Emerging Markets Investment Trust
A large, well resourced trust offering very broadly diversified exposure to the world's emerging markets...
26 Apr 2016 Analysts welcome Mercantile results
Analysts at Winterflood Securities think The Mercantile Investment Trust is an attractive alternative for investors seeking smaller companies exposure on its current discount.
18 Mar 2016 Results roundup: Murray International and JP Morgan Claverhouse
Analysts at JPMorgan Cazenove say Murray International is through the worst after a strong start to the year, and JP Morgan Claverhouse remains a core holding for Winterflood Securities.
05 Feb 2016 Fund Analysis
A large cap focused trust with a high conviction stock picking approach, which aims to generate capital growth and income via a portfolio of UK equities.
View all

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