JPMorgan Mid Cap: New research
· JMF uses quant research and fundamental analysis to take advantage of investor psychology and market inefficiencies...
JPMorgan Mid-Cap (JMF) aims to generate long-term capital growth from UK mid-cap stocks by using quantitative research and fundamental stock analysis to take advantage of investor psychology and inefficiencies in the market. The managers, Georgina Brittain and Katen Patel, believe this approach is perfectly suited to the mid cap market as it is less well covered by analysts than the large cap market and is therefore less efficient, meaning that there are many opportunities to gain an edge with superior analysis.
The track record of JMF shows the potential in their approach: over the past five years JMF has generated NAV total returns of 61.2%, compared to just 36.6% for the FTSE 250. The share price has risen 66.4% over the same period, as the discount has narrowed. Since 2013, the first full year Georgina was in charge, NAV total returns have been ahead of the index in four of the six full years, and in 2019 are so far ahead of the index again. The trust has done particularly well in the strongest rallies, such as in 2013 and 2017. The two down years were 2016 and 2018, both related to the Brexit referendum and aftermath.
The trust aims for capital growth, but it does have a progressive dividend policy, aiming to grow the dividend ahead of inflation each year. Over the past five years it has comfortably achieved this, with annualised growth in the payout of 10.2%, excluding special dividends. The historic yield is 2.5%, again excluding specials, which by definition may not recur. With specials included the dividend yield rises to 2.6%.
Georgina and Katen have reduced their gearing since the Brexit vote, and have been tending to run with a maximum of 5% of NAV in gearing, in recognition of the risks to the UK economy and currency from the ongoing Brexit negotiations. They have aimed to ensure the portfolio is not over-exposed to one outcome from the negotiations (i.e. a no-deal exit or a smooth transition).
Nevertheless, the sector and trust remain out of favour thanks to the Brexit issue, with JMF trading on a 12% discount, wider than the sector average of 9.7% and the trust's one-year average of 7.4%. A change of broker in June 2019 is intended to help support marketing efforts to narrow the discount, although we understand that the board's reticence to use buybacks to this end reflects its belief that while the Brexit negotiations are ongoing, the UK is likely to remain out of favour.
Visit http://www.trustintelligence.co.uk/investor for more high quality independent investment trust research.
Not for distribution, directly or indirectly, in or into the United States or any jurisdiction in which such distribution would be unlawful.
JPMorgan Mid Cap is a client of Kepler Trust Intelligence. This material should be considered a marketing communication, and is not independent research.
Kepler Partners is not authorised to make recommendations to Retail Clients. This report is based on factual information only, and is solely for information purposes only and any views contained in it must not be construed as investment or tax advice or a recommendation to buy, sell or take any action in relation to any investment.
This report has been issued by Kepler Partners LLP solely for information purposes only and the views contained in it must not be construed as investment or tax advice or a recommendation to buy, sell or take any action in relation to any investment. If you are unclear about any of the information on this website or its suitability for you, please contact your financial or tax adviser, or an independent financial or tax adviser before making any investment or financial decisions.
The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Kepler Partners LLP to any registration requirement within such jurisdiction or country. Persons who access this information are required to inform themselves and to comply with any such restrictions. In particular, this website is exclusively for non-US Persons. The information in this website is not for distribution to and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States of America to or for the benefit of US Persons.
This is a marketing document, should be considered non-independent research and is subject to the rules in COBS 12.3 relating to such research. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research.
No representation or warranty, express or implied, is given by any person as to the accuracy or completeness of the information and no responsibility or liability is accepted for the accuracy or sufficiency of any of the information, for any errors, omissions or misstatements, negligent or otherwise. Any views and opinions, whilst given in good faith, are subject to change without notice.
This is not an official confirmation of terms and is not to be taken as advice to take any action in relation to any investment mentioned herein. Any prices or quotations contained herein are indicative only.
Kepler Partners LLP (including its partners, employees and representatives) or a connected person may have positions in or options on the securities detailed in this report, and may buy, sell or offer to purchase or sell such securities from time to time, but will at all times be subject to restrictions imposed by the firm's internal rules. A copy of the firm's conflict of interest policy is available on request.
Past performance is not necessarily a guide to the future. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that Independent financial advice should be taken before entering into any financial transaction.
Kepler Partners LLP is a limited liability partnership registered in England and Wales at 9/10 Savile Row, London W1S 3PF with registered number OC334771.
Kepler Partners LLP is authorised and regulated by the Financial Conduct Authority.
About this service
Kepler Trust Intelligence for private investors is not just another news and research website. Our aim is to create a library of high quality investment strategy research, fund analysis and useful guides for private investors, all written in-house by experienced analysts on the investment companies team at Kepler Partners.
We are focused entirely on investment trusts, however we believe that it helps to understand them better if they are placed on a level playing field with OEICs, so you will see comparisons between the two in these pages often.
Our content falls into three categories;
Investment strategy articles are designed to highlight opportunities and developments which are of interest to investment trust investors, positive or negative.
Fund research focuses on individual trusts, examining them in detail to create a snapshot picture which you can use to decide whether or not you want to invest in them.
Educational output is split into simple guides, designed to help beginners understand how investment trusts work, and more complex guides to sectors, regions and strategies which may be of interest to investors.
We do not produce massive amounts of research. Our focus is on quality, not quantity, so we are unlikely to publish more than four or five articles in a given week. For this reason we recommend that you join our mailing list, and we'll send you an email once a week alerting you to what's new on the site. We won't sell your details, and we won't spam you with useless updates.
How are we funded?
Kepler Trust Intelligence is funded entirely by the providers of investment trusts, and is made available freely to any person (professional or private individual) who wants to access it. We clearly disclose all of our relationships, but our research is either paid for directly by specific trusts and their boards, or more generally by the larger asset management groups who pay to have adverts and advertorial. As a result, all of our research should be considered "non-independent" and readers should consider it as marketing.
All of our content is freely available to anyone. We run two versions of the site - one for professionals and one for private investors. The professional site requires readers to volunteer the name of the company they work for and the city / region - so that from a compliance perspective we can be satisfied that all readers really are a professional.
We provide information, not advice
While we hope that you find the research we publish useful, and we believe it will help you to make a more informed decision, but we must of course stress that none of the research published here constitutes a recommendation, or advice, and you should not think that - just because we've published a report on a trust - we believe that trust is a 'buy'. Please read our terms and conditions.
If you want to manage your own investments we hope that this website is a useful source of information which helps you to do that, however if you are in any doubt, you should speak to a financial adviser.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.