JPMorgan Overseas Investment Trust Plc 2015 AGM Presentation. 5 November 2015

Transcription

1 JPMorgan Overseas Investment Trust Plc 2015 AGM Presentation 5 November 2015

2 Historic portfolio returns ending 30 June 2015 Financial year portfolio performance % Total Return MSCI AC World JPM Overseas Investment Trust June June June June June June 2015 Excess Return Source. Morningstar and J.P.Morgan Asset Management. Financial year performance is 12 month rolling return from 30 June 2009 to 30 June (i.e performance is 30 June 2014 to 30 June 2015). Performance data has been calculated on NAV to NAV basis, including ongoing charges and any applicable fees, with any income re-invested, in GBP. Excess return is based on arithmetic returns. Indices do not include fees or operating expenses and are not available for actual investment. Past performance is not an indication of future performance. 1

3 Result Highlights Portfolio returns ending 30 June month Performance Long Term Performance from 2015 Annual Report Return to shareholders: +10.3% Return on net assets: +11.8% MSCI AC World Index: +9.5% Dividend: 16.0p JPMorgan Overseas - return to shareholders JPMorgan Overseas - diluted return on net assets Benchmark year performance 5 year performance 10 year performance Source: JP Morgan Overseas Investment Trust 2015 Annual Report (NAV values can be found on page 10). Shareprice return from Morningstar, mid market price to mid market price with dividends reinvested. Net asset return based on undiluted net asset value. Benchmark is MSCI AC World. Dividends are subject to approval at the Annual General Meeting. Past performance is not an indication of future performance. All returns are net of fees. 2

4 2015 Performance Review 3

5 Contributions to Total Return 12 months to 30 June 2015 % Benchmark return 9.5 Stock selection 2.2 Asset allocation -0.1 Currency 0.9 Gearing / cash 0.6 Manager contribution 3.6 Portfolio total return 13.1 Ongoing charges/ expenses -0.6 Performance fee -0.4 Share buyback 0.2 Other effects -0.8 The portfolio outperformed its benchmark over the period. Stock selection was positive across a wide range of sectors, notably in the healthcare, banks and industrial cyclical sectors. Stock selection in the transport, services & consumer cyclicals and basic industries sectors detracted from relative performance. Net asset value total return (undiluted) 11.8 Net asset value total return (diluted) 11.3 Change in premium/discount -1.0 Ordinary Share price total return 10.3 Source: JP Morgan Overseas Investment Trust 2015 Annual Report, Xamin, J.P.Morgan Asset Management and Morningstar. All figures are on a total return basis. Performance data has been calculated on NAV to NAV basis, including ongoing charges and any applicable fees, with any income re-invested, in GBP Past performance is not an indication of future performance. 4

6 How am I managing JPMorgan Overseas (JMO)? Bottom-up stock picking conviction based approach Disciplined investment process based on 4 demanding criteria Experienced team of 70 analysts on average 18 years industry experience Flexibility to invest anywhere Valuation Significant profit potential JMO Catalyst Time Horizon 5

7 Finnish pulp, paper and timber manufacturer. Cutting costs and capacity, key beneficiary of consolidation in paper industry Attractive dividend yield and cash flow, solid balance sheet Identifying the four key price drivers: Valuation Signal - Ranked 1 st quintile Significant profit growth potential - 45% current to normalised Catalysts - Expanding sales channels, launching new products, cutting costs Timeline on the cusp of change months Fray Bentos mill in Uruguay Source: J.P. Morgan Asset Management. September The company above is shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. J.P. Morgan Asset Management may or may not positions on behalf of its clients in any or all of the aforementioned securities. The use of the above company logos is in no way an endorsement for J.P.Morgan Asset Management investment management services. 6

8 One of the most flexible major value retailers in the world Significant plans to increase number of stores Identifying the four key price drivers: Valuation Signal - Ranked 2 nd quintile Significant profit growth potential - 30% current to normalised Catalysts - Store expansion, margin improvement, E- commerce Timeline on the cusp of change months Source: J.P. Morgan Asset Management. TJX Company website, May The company above is shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. J.P. Morgan Asset Management may or may not positions on behalf of its clients in any or all of the aforementioned securities. The use of the above company logos is in no way an endorsement for J.P.Morgan Asset Management investment management services. 7

9 A leading US health insurance company Key beneficiary of Medicare Advantage and US healthcare reform Identifying the four key price drivers: Valuation Signal - Ranked 2 nd quintile Significant profit growth potential - 40% current to normalised Catalysts - Shift towards Medicare Advantage plans, increasing market share, M&A Timeline on the cusp of change months Source: J.P. Morgan Asset Management. Humana Company website, May The company above is shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. J.P. Morgan Asset Management may or may not positions on behalf of its clients in any or all of the aforementioned securities. The use of the above company logos is in no way an endorsement for JPMAM investment management services. 8

10 A global leader in air-conditioners selling into >140 countries Growth in highly profitable emerging markets, where penetration is low Expanded in the US through Goodman acquisition Identifying the four key price drivers: Valuation Signal - Ranked 1 st quintile Significant profit growth potential - 70% current to normalised Catalysts - Expanding sales channels, launching new products, cutting costs Timeline on the cusp of change months Source: J.P. Morgan Asset Management. September The company above is shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. J.P. Morgan Asset Management may or may not positions on behalf of its clients in any or all of the aforementioned securities. The use of the above company logos is in no way an endorsement for J.P.Morgan Asset Management investment management services. 9

11 Relative performance was negative in the third quarter 2015 NAV return: -6.9% MSCI AC World Index: -6.0% Excess*: -1.0% Equity markets were weak amid fears an economic slowdown in China and other emerging markets would spread to developed markets. Stock selection was notably weak in the basic industries and energy sectors. Stock selection was positive in the media and transport, services & consumer cyclical sectors. Source: J.P.Morgan Asset Management. Performance data has been calculated on Offer net of fees basis in GBP. 30 September * Geometric excess performance. A geometric mean return is an average return that considers compounding and is the standard metric for conveying return performance for investments. When investment professionals refer to the average annual return, they are referring to the geometric average annual return. 10

12 Outlook 11

13 The recent market decline in perspective: typical for mid-cycle GTM U.S. Page 12 Source: FactSet, Standard & Poor s, J.P. Morgan Asset Management. Returns are based on price index only and do not include dividends. Intra-year drops refers to the largest market drops from a peak to a trough during the year. For illustrative purposes only. *Returns shown are calendar year returns from 1980 to 2014 excluding 2015, which is year-to-date. Guide to the Markets U.S. Data are as at 30 September

14 US: Most recent activity indicators remain generally positive. The National Association of Home Builders Index (NAHB) is at the highest point in the current cycle and consumer confidence readings are robust NAHB Consumer confidence NAHB Index US consumer confidence Source: J. P. Morgan Asset Management. 30 September The opinions and views expressed here are those held by the author at the date of publication which are subject to change and are not to be taken as or construed as investment advice. 13

15 European corporates expected to benefit from margin expansion US margins are ahead of Europe but European sales are picking up strongly, bringing operating leverage Source: J. P. Morgan Asset Management, Redburn. As at October Forecasts, projections and other forward looking statements are based upon current beliefs and expectations. They are for illustrative purposes only and serve as an indication of what may occur. Given the inherent uncertainties and risks associated with forecasts, projections and other forward statements, actual events, results or performance may differ materially from those reflected or contemplated. 14

16 Signs of a recovery in Europe, and still a significant valuation gap vs the US Eurozone private credit growth Eurozone Cycle-adjusted P/E relative to the US Source: J.P. Morgan Asset Management, JPM, UBS Europe, as at 31 August For illustrative purposes only. The opinions and views expressed here are those held by the author at the date of publication which are subject to change and are not to be taken as or construed as investment advice. 15

17 Japan: Gradual corporate awakening combined with aggressive BoJ action At 15% year-on-year EPS growth is the strongest of the main regions and Japanese economic business survey remains positive MSCI Japan ROE vs Other regions Tankan Business Conditions Large Enterprises - Services 20% 15% % 5% 0% -5% Europe ROE Japan ROE US ROE World ROE Source: JPMorgan Asset Management, Morgan Stanley Research, Bloomberg to 30 September

18 Japan: Companies are taking more proactive stance on shareholder returns Dividends and Buybacks Ratio of companies with independent directors (%) JPY trillion 15 Share Buybacks 12 9 Dividends E YTD 2015 Note: (1) Share buyback data are for repurchases of common stock, excluding repurchases from Resolution and Collection Corp and repurchases of preferred stock. (2) FY14 dividend and share buyback amounts are Nomura estimates. Sources: Nomura, based on company disclosures and Toyo Keizai data, J.P. Morgan Asset Management. As at 12 June Sources: Tokyo Stock Exchange, J.P. Morgan Asset Management. As at 17 Jun

19 China is transforming to a service-led economy What the Macro data tell us % share of tertiary industry to GDP is steadily increasing 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 Retail sales (Rmb bn, LHS) Alibaba Revenue (USDmn, LHS) Keqiang Index (YoY%, RHS) Note: Keqiang Index is created by The Economist, combining Li Keqiang s three preferred indicators of electricity consumption, rail cargo volume and bank loans. Source: WIND, CICC Research, J.P. Morgan Asset Management. As at 31 Aug The opinions and views expressed here are those held by the author at the date of publication which are subject to change and are not to be taken as or construed as investment advice. Source: JPMorgan Global Economic Research. As at 31 Aug

20 Policy uncertainty in China reached extreme levels 400 Economic Policy Uncertainty Index for China Jan-95 Jan-98 Jan-01 Jan-04 Jan-07 Jan-10 Jan-13 Source: J.P. Morgan Asset Management, Morgan Stanley as at 30 September

21 Emerging markets exposure has been heavily penalized in 2015, particularly in Q3 Equity Index Returns, rebased to Mining and Energy P/B ratios well below long term averages especially energy Metals&Mining P/Book relatuve to Europe Median +1stdev 1stdev MSCI EM MSCI World MSCI World with EM exposure Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep Energy P/B Median +1 Stdev -1 Stdev Source: Bloomberg, MSCI, J.P. Morgan Asset Management. As at 30 September Indices are net in USD. Rebased to 100 at 31 December * Performance of top 300 developed market-listed companies with the highest emerging market exposure (defined by MSCI). Source: J.P. Morgan Asset Management, Morgan Stanley. 30 September

22 Valuation spreads at highest level since 2011 indicating unusually high levels of opportunity Source: JPMorgan Asset Management, Bloomberg, 30 September Shown for illustrative purposes only. A Dividend Discount Rate (DDR) is the discount rate that equates the present value of the estimated stream of future dividends to the current market price. The J.P. Morgan S&P 500 DDR is a bottom-up, sector-neutral and capitalization-weighted average of DDRs on large-capitalization stocks as estimated by J.P. Morgan Asset Management equity research analysts. A DDR does not represent a stock's expected actual return in any given time period. Past performance does not guarantee future results. For illustrative purposes only. 21

23 Current Portfolio Positioning 22

24 Key areas of conviction today Portfolio Area European Recovery Japan Renaissance US Media Global Semiconductors Global Airlines Healthcare Indirect Emerging Markets exposure Stock Examples Outokumpu, UPM, Electrolux, Henkel, Continental, Bankia Daikin, Sony, Mitsui Fudosan Facebook, Google, 21 st Century Fox ASML, Avago, Lam Research Japan Airlines, Ryanair, United Continental Humana, Shire, Allergan SABMiller, Henkel, Bayer, Citigroup, First Quantum Source: J.P. Morgan Asset Management, as at 31 August The company above is shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. J.P. Morgan Asset Management may or may not positions on behalf of its clients in any or all of the aforementioned securities. 23

25 Unrestricted portfolio reflects our stock views Sector Exposures Abs % Relative % Regional Exposures Transport Services & Cons Cyc Healthcare Technology Semi Conductor Industrial Cyclical Media Basic Industries Energy Autos Utilities Consumer Non Durable UK Europe ex UK Japan Pacific ex Japan Emerging Markets North America % Source: J.P.Morgan Asset Management, Factset, As at 30 September 2015, Relative to MSCI AC World. Excluding cash. The Fund is an actively managed portfolio. Holdings, sector weights, allocations and leverage, as applicable, are subject to change at the discretion of the Investment Manager without notice. 24

26 Summary Focused approach We continue to identify many attractive companies which meet the four key criteria valuation signal, significant profit growth potential, identifiable catalyst and timeline Unrestricted approach Invest wherever four key characteristics exist Deep partnership between analysts and portfolio managers An enduring partnership built on history and respect drives idea generation The Company is delivering high conviction ideas from JPMorgan Asset Management in a focused portfolio of global equities 25

27 Appendix 26

28 Quarterly rolling 12 month performance Ending September 2015 % 2014/ / / / /11 Share price Net asset value C Benchmark B B Prior to the 01/07/08 benchmark was the MSCI World Index ( ) C Cum income only NAV with debt at par, diluted for treasury and/or subscription shares if applicable Source: J.P.Morgan Asset Management/Morningstar. Performance data has been calculated a NAV to NAV basis, including ongoing charges and applicable fees, with any income reinvested, in GBP. Please note that Benchmark indices do not include fees or operating expenses and are not for actual investment. As at 30 September

29 Glossary of Terms and Definitions Portfolio return Return on net assets, net of management fees and administration expenses, but excluding both the effect of Subscription shares which have been converted during the year and the dilutive impact of Subscription shares in issue at the year end. Return to Ordinary shareholders/unit holders Total return to the Ordinary shareholder, or Unit holder, on a mid-market price to mid-market price basis, assuming that all dividends received were reinvested, without transaction costs, in the Ordinary shares of the Company at the time the shares were quoted ex-dividend. Diluted net asset value ( NAV ) per Ordinary share The NAV per Ordinary share assuming that all outstanding Subscription shares were converted into Ordinary shares at the year end. Diluted return on net assets Return on the diluted net asset value ( NAV ) per share, on a bid value to bid value basis, assuming that all dividends paid out by the Company were reinvested in the shares of the Company at the NAV per share at the time the shares were quoted ex-dividend. Diluted net asset value ( NAV ) per Ordinary share The NAV per Ordinary share assuming that all outstanding Subscription shares were converted into Ordinary shares at the year end. Diluted return on net assets Return on the diluted net asset value ( NAV ) per share, on a bid value to bid value basis, assuming that all dividends paid out by the Company were reinvested in the shares of the Company at the NAV per share at the time the shares were quoted ex-dividend. In accordance with industry practice, dividends payable which have been declared but which are unpaid at the balance sheet date are deducted from the diluted NAV per share when calculating the diluted return on net assets. Undiluted return on net assets Return on the undiluted net asset value ( NAV ) per share, on a bid value to bid value basis, assuming that all dividends paid out by the Company were reinvested in the shares of the Company at the NAV per share at the time the shares were quoted ex-dividend. In accordance with industry practice, dividends payable which have been declared but which are unpaid at the balance sheet date are deducted from the undiluted NAV per share when calculating the undiluted return on net assets. 28

30 Glossary of Terms and Definitions - continued Benchmark return Total return on the benchmark, on a mid-market value to mid-market value basis, assuming that all dividends received were reinvested in the shares of the underlying companies at the time the shares were quoted ex-dividend. The benchmark is a recognised index of stocks which should not be taken as wholly representative of the Company s investment universe. The Company s investment strategy does not follow or track this index and consequently, there may be some divergence between the Company s performance and that of the benchmark. Gearing/Net cash Gearing represents the excess amount above shareholders funds of total assets, expressed as a percentage of the shareholders funds. Total assets include total investments and net current assets/liabilities less cash/cash equivalents and excluding bank loans of less than one year. If the amount calculated is negative, this is shown as a net cash position. Ongoing charges The ongoing charges represent the Company s management fee and all other operating expenses, excluding finance costs, expressed as a percentage of the average of the daily net assets during the year. Share price discount/premium to net asset value ( NAV ) If the share price of an investment trust is lower than the NAV per share, the shares are is said to be trading at a discount. The discount is shown as a percentage of the NAV. The opposite of a discount is a premium. It is more common for an investment trust s shares to trade at a discount than at a premium. Performance attribution Analysis of how the Company achieved its recorded performance relative to its benchmark. 29

31 J.P. Morgan Asset Management This is a promotional document and as such the views contained herein are not to be taken as an advice or recommendation to buy or sell any investment or interest thereto. Reliance upon information in this material is at the sole discretion of the reader. Any research in this document has been obtained and may have been acted upon by J.P. Morgan Asset Management for its own purpose. The results of such research are being made available as additional information and do not necessarily reflect the views of J.P.Morgan Asset Management. Any forecasts, figures, opinions, statements of financial market trends or investment techniques and strategies expressed are unless otherwise stated, J.P. Morgan Asset Management s own at the date of this document. They are considered to be reliable at the time of writing, may not necessarily be all-inclusive and are not guaranteed as to accuracy. They may be subject to change without reference or notification to you. It should be noted that the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Changes in exchange rates may have an adverse effect on the value, price or income of the product(s) or underlying overseas investments. Both past performance and yield may not be a reliable guide to future performance. There is no guarantee that any forecast made will come to pass. Furthermore, whilst it is the intention to achieve the investment objective of the investment product(s), there can be no assurance that those objectives will be met. J.P. Morgan Asset Management is the brand name for the asset management business of JPMorgan Chase & Co and its affiliates worldwide. You should note that if you contact J.P. Morgan Asset Management by telephone those lines may be recorded and monitored for legal, security and training purposes. You should also take note that information and data from communications with you will be collected, stored and processed by J.P. Morgan Asset Management in accordance with the EMEA Privacy Policy which can be accessed through the following website This material should not be considered as a recommendation relating to the acquisition or disposal of investments. This material does not contain sufficient information to support an investment decision and investors should ensure that they obtain all relevant information before making any investment. Investment is subject to documentation (Investment Trust Profiles and Key Features and Terms and Conditions), copies of which can be obtained free of charge from J.P. Morgan Asset Management Marketing Limited. Issued by J.P. Morgan Asset Management Marketing Limited which is authorised and regulated in the UK by the Financial Conduct Authority. Registered in England No Registered address: 25 Bank St, Canary Wharf, London E14 5JP 4d03c02a8002d8b3 30