JPMorgan Income & Growth Investment Trust plc Annual General Meeting. 14 June 2016

Transcription

1 JPMorgan Income & Growth Investment Trust plc Annual General Meeting 14 June 2016

2 Agenda JPMIGIT Performance Trust Overview UK Equity Portfolio Outlook 1

3 Investment objectives The Company s investment objective is to meet the final capital entitlement of the Income Shareholders and to provide them with a regular quarterly income as well as to provide capital growth for Capital Shareholders through to redemption on or around 30th November Specifically: to maintain the current level of income to maintain a minimum of 60% of the assets in UK equity to maintain gearing (borrowing) to maximise the opportunities for capital growth to achieve an attractive risk-adjusted return Source: J.P. Morgan Asset Management, as at 31st May The targets and aims provided above are the Investment Manager s targets and aims only and are not necessarily part of the Fund s investment objectives and policies as stated in the prospectus. There is no guarantee that these will be achieved. Investment trusts may borrow to finance further investment (gearing). The use of gearing will increase the volatility of movements in the Net Asset Value (NAV) per share. This means that a relatively small change, down or up, in the value of a trust's assets will result in a magnified fall or rise, in the same direction, of the investment trust s NAV per share. 2

4 Performance - Financial year ending 31st January 2016 JPMorgan Income and Growth Investment Trust Plc Shareholders Funds Return -4.0% (+8.9% 2015) FTSE 350 Total Return Index (Net) -4.9% (+7.3% 2015) Dividend per Income share 4.8p (4.4p 2015) Positive absolute returns since the financial year end - 4 months to 31 st May 2016 Source: J.P. Morgan Asset Management. The above are total returns and include dividends reinvested. Past performance is not an indication of future performance 3

5 Performance - Financial year ending 31st January 2016 Underlying strategies: UK Equities +0.5%** JPMorgan Multi-Asset Income Fund -4.3% JPMorgan Europe Strategic Dividend Fund -1.6% JPMorgan Global High Yield Bond Fund -6.5% FTSE 350 Total Return Index (Net) -4.9% Source: J.P. Morgan Asset Management, as at 31 st January Fund performance is NAV to NAV income reinvested net of X share class fees in GBP.**Base (NAV) returns in GBP includes net dividends reinvested. Past performance is not an indication of future performance. 4

6 Performance record Quarterly rolling 12m ending March / / / / /12 Shareholders Funds Return (%) FTSE 350 Total Return Index (Net) (%) Source: J.P. Morgan Asset Management; Morningstar Direct. Returns as at 31 March Performance data has been calculated on NAV to NAV basis, including ongoing charges and any applicable fees, with any income reinvested, in GBP. Please note Benchmark Indices do not include fees or operating expenses and are not available for actual investment Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is not an indication of future performance. 5

7 Agenda JPMIGIT Performance Portfolio positioning UK equity portfolio Outlook 6

8 Changes in portfolio positioning JPMorgan Income & Growth Investment Trust Strategy 31 st January st January 2015 UK Equities JPM Multi-Asset Income Fund JPM Europe Strategic Dividend Fund JPM Global High Yield Bond Fund Cash Total Source: J.P. Morgan Asset Management, as at 31st January 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. The companies/securities above are 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 hold positions on behalf of its clients in any or all of the aforementioned securities. 7

9 Summary of underlying strategies Multi-Asset Income Fund Europe Strategic Dividend Fund Global High Yield Bond Fund Objective To provide income by investing primarily in a global portfolio of income generating securities To provide long-term returns by investing primarily in high dividendyielding European equities To provide a return in excess of global bond markets by investing primarily in global below investment grade corporate debt securities Yield 3.8%* 4.4% 6.6%** Activity Reduce allocations to Global equities and increased exposure to US high yield Reduced underweight in materials and neutralised underweight in automobiles & components Maintained overweight to gaming and cable and preference to technology, chemicals and healthcare sectors...diversification of asset classes has improved portfolio yield Source: J.P. Morgan Asset Management, as at 31 January 2016 * Current yield (net) **Yield-to-maturity 8

10 Agenda JPMIGIT Performance Portfolio positioning UK equity portfolio Outlook 9

11 UK equity performance A good performance by the UK equity portfolio during 12 months ending 31 January 2016 UK equity portfolio +0.53% vs FTSE 350 benchmark index -4.93% Outperformance due to positions in housebuilders, media and insurance stocks...positive returns in latest financial year Source: J.P. Morgan Asset Management, Bloomberg. Past performance is not an indication of future performance. Data rebased to 100 at 31 January 2015 to 31 January 2016, includes net dividends reinvested. Returns in GBP. 10

12 Performance attribution 12 months to 31 January 2016 Key positive stock contributors Berkeley Group ITV Beazley Imperial Tobacco Kcom Group Provident Financial WH Smith Taylor Wimpey 0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7% 0.8%...positive performance from some of our cyclical holdings Source: J.P. Morgan Asset Management, FactSet. Allocations are made at the manager s discretion and can be changed without notice. The inclusion of the securities mentioned above is not to be interpreted as recommendations to buy or sell. 11

13 Portfolio construction Driven by value & momentum, with a yield focus Not benchmark constrained Focused portfolio of UK equities Diversification: Understand different areas of risk Portfolio yield premium...aiming to capture superior income and growth returns from UK equities 12

14 Stock example: Booker Relative price vs. FTSE 350 Index Largest cash & carry operator in the UK and owner of Londis, Budgens and Premier brands Clear strategic plan to grow the profitability of the business, thus generating more cash Net cash on the balance sheet has allowed the company to pay special dividends in the past robust cash generation Source: Thomson Reuters Datastream. Rebased to 100 as at 30 December 2012, data to 30 April Returns are in GBP. The information in this case study is intended as an example only and should not be construed as advice, it may not be suitable for your particular circumstances and if you are unsure of the suitability of any investment you should seek financial advice. Past performance is not a guarantee of the future. The opinions and views expressed here are those held by the author as at date of this document, which are subject to change and are not to be taken as or construed as investment advice. J.P. Morgan Asset Management may or may not hold positions on behalf its clients in any or all of the aforementioned securities. 13

15 Stock example: Taylor Wimpey Relative price vs. FTSE 350 Index One of the largest housebuilders in the UK Housebuilding industry supported by government policies. Continuous dividend growth. 1.3bn of dividends forecast to be returned over the next three years capital and dividend growth for shareholders Source: Thomson Reuters Datastream. Rebased to 100 as at 30 December 2012, data to 30 April Returns are in GBP. The information in this case study is intended as an example only and should not be construed as advice, it may not be suitable for your particular circumstances and if you are unsure of the suitability of any investment you should seek financial advice. Past performance is not a guarantee of the future. The opinions and views expressed here are those held by the author as at date of this document, which are subject to change and are not to be taken as or construed as investment advice. J.P. Morgan Asset Management may or may not hold positions on behalf its clients in any or all of the aforementioned securities. 14

16 UK equity portfolio stock positions Top 10 overweight positions as at 30 April 2016 Stock Sector Overweight position % Imperial Brands Tobacco 2.8 Beazley Non-Life Insurance 2.7 Direct Line Insurance Non-Life Insurance 2.1 British American Tobacco Tobacco 2.1 ITV Media 2.1 GlaxoSmithKline Pharmaceuticals 2.0 Berkeley Group Home Construction 1.9 Phoenix Group Life Insurance 1.8 Taylor Wimpey Home construction 1.7 Novae Non-Life Insurance strong conviction in our best stock ideas Source: J.P. Morgan Asset Management. The companies/securities above are 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 hold positions on behalf of its clients in any or all of the aforementioned securities. 15

17 Agenda JPMIGIT Performance Portfolio positioning UK equity portfolio Outlook 16

18 Outlook Global growth is below potential through 2016 but we are optimistic for it to be a little better from the middle of the year We remain hopeful the US economy will rebound in the second half and this supports the corporate bond exposure in the portfolio The European economic recovery is on track but we would like to see this reflected in stronger banking performance In the UK, we note the weak data but recognise that Brexit uncertainty confuses matters Markets will continue to be concerned with the efficacy of central bank policy We are modestly positive on high yield bonds with the potential for equity-like returns with relatively lower risk given the attractive yields available from the asset class...aiming to meet the needs of both income and capital shareholders The opinions and views expressed here are those held by the author as at 31st May 2016, which are subject to change and are not to be taken as or construed as investment advice. 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. 17

19 J.P. Morgan Asset Management Important risk disclosures The investment objective of a trust may allow some flexibility in terms in portfolio composition. Exchange rate changes may cause the value of underlying overseas investments to go down as well as up. This trust may invest in non investment grade bonds which increases the capital risk and have an adverse effect on the performance of funds which invest in them. Where permitted, a trust may invest in other investment trusts that utilise gearing (borrowing) which will exaggerate market movements both up and down. For income funds/shares - Dividend income is not guaranteed and will fluctuate. Investing in high yielding stocks may involve higher degree of risk as high yields are not guaranteed and will fluctuate. This fund may use derivatives for investment purposes or for efficient portfolio management. Convertible bonds are subject to the risks associated with both debt and equity securities, and to risks specific to convertible securities. Investors should be prepared for greater volatility than straight bond investments, with an increased risk of capital loss, but with the potential of higher returns. Their value may change significantly depending on economic and interest rate conditions, the creditworthiness of the issuer, the performance of the underlying equity and general financial market conditions. In addition, issuers of convertible bonds may fail to meet payment obligations and their credit ratings may be downgraded. This is generally known as credit risk. Convertible bonds may also be subject to lower liquidity than the underlying equity securities. External factors may cause an entire asset class to decline in value. Prices and values of all share or all bonds could decline at the same time. This trust may utilise gearing (borrowing) which will exaggerate market movements both up and down. This trust may also invest in smaller companies which may increase its risk profile. The share price may trade at a discount to the Net Asset Value of the company. 18

20 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 current and 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 Investment is subject to documentation (Investment Trust Profiles, Key Features and Terms and Conditions), copies of which can be obtained free of charge from JPMorgan Asset Management Marketing Limited. Issued by JPMorgan 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. 4d03c02a