JPMorgan Global Emerging Markets Income Trust plc Annual General Meeting 27 November 2017
JPMorgan Global Emerging Markets Income Trust plc 1
JPMorgan Global Emerging Markets Income Trust - Performance 31 July 2016 31 July 2017 Portfolio return +17.7% Index +25.7% Return to shareholders +14.4% Return on net assets +16.4% Strong absolute returns but clear lag versus broader market Chinese internet has been the key drag to relative performance The Trust has delivered a steady dividend through a challenging period for Emerging Markets corporate earnings Dividend* 4.90p Source: Annual Report and Accounts. J.P. Morgan Asset Management. Data as of 31 July 2017.* Total Dividend for last financial year (per share). Past performance is not necessarily a reliable indicator for current and future performance. 2
Why do we invest from an Income perspective in Emerging Markets? Income investing in Emerging Markets can be a positive and sustainable way to invest in the asset class Combination of income plus growth can be powerful source of total returns This approach can deliver a quality, value tilt We see a direct link between payout ratio and governance Expansion of Emerging Markets (EM) yield universe and payout ratios have held steady over many years We aim to have a long term portfolio of dividend-paying stocks which will provide income for shareholders and offer potential for capital returns from Emerging Markets Opinions, estimates, forecasts, projections and statements of financial market trends are based on market conditions at the date of the publication, constitute our judgment and are subject to change without notice. There can be no guarantee they will be met. 3
Income Investing in Emerging Markets Yield investing in EM: relative performance of EM High Yield vs EM 70% 60% 50% 40% 30% 20% 10% Over a multi-year period, investing via higher yield stocks in Emerging Markets has been a tailwind for performance More recently, yield investing in EM has been more difficult This has been a challenging period of the cycle for both earnings and dividends in EM Investors have recently focused more on pure growth stocks 0% Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Source: Bloomberg. Data from 29 December 2000 to 31 October 2017. Past performance is not a reliable indicator of current and future results. 4
Historic performance JPMorgan Global Emerging Markets Income Trust plc performance since inception* JPMorgan Global Emerging Markets Income Trust plc performance last 3 years 100% EM Income Trust 50% EM Income Trust 80% 60% MSCI EM 40% 30% 20% MSCI EM 40% 10% 20% 0% 0% -10% -20% -20% Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17-30% Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 JPMorgan EM Income Trust has outperformed MSCI EM over the seven years since launch Yield style headwinds have caused a recent, relative performance lag Source: Bloomberg. Data from 30 July 2010 to 31 October 2017. Total return numbers from Bloomberg (NAV for JPMorgan Global Emerging Markets Income Trust plc, Index return for MSCI *Inception date: July 2010 Past performance is not a reliable indicator of current and future results. Source: Bloomberg. Data from 31 October 2014 to 31 October 2017. Total return numbers from Bloomberg (NAV for JPMorgan Global Emerging Markets Income Trust plc, Index return for MSCI 5
Narrow market leadership in 2017 Internet companies have been at the epicentre of the pure growth rally in 2017 As these companies pay little or no dividends they are unsuitable for an Income strategy Company Dividend yield Price to Earnings 2017 YTD performance (GBP) Weight in Income Trust Weight in MSCI EM Index Growth stock examples Alibaba 0% 51x 96% 0% 4.1% Tencent 0.2% 50x 71% 0% 5.4% Naspers 0.2% 44x 55% 0% 2.1% Income stock examples Sberbank 4.5% 8x -4% 2.4% 0.8% Fuyao Glass 3% 22x 21% 2.8% 0% Source: Bloomberg (valuations, performance), J.P. Morgan Asset Management (fund and index weights). Data as of 31 October 2017 The companies above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. Past performance is not a reliable indicator of current and future results. 6
What do we need to understand? Key questions Return on Equity (ROE) Dividend yield Free cash flow Dividend sustainability Dividend policy Growth over 5 years 7
Diversified combination of Income & Growth Delta Electronics: Taiwanese IT company which has successfully evolved its business mix over time. AVI: A South African food products company whose brands span everything from hot beverages to frozen convenience foods. Dividend payout 80%. Moneta Bank: Czech Republic financial with consumer lending tilt, yielding close to 7%. Target 20% of portfolio Target 60% of portfolio Target 20% of portfolio Low dividend yield Target dividend yield High Dividend Yield ( <3% ) ( 3-6% ) ( >6% ) Source: J.P. Morgan Asset Management. 12 month yield, Eikon, data as of September 2016.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. Diversification does not guarantee investment returns and does not eliminate the risk of loss. 8
JPMorgan Global Emerging Markets Income Trust - Performance 31 July 2016 31 July 2017 Portfolio return +17.7% Index +25.7% Return to shareholders +14.4% Return on net assets +16.4% Strong absolute returns but clear lag versus broader market Chinese internet has been the key drag to relative performance The Trust has delivered a steady dividend through a challenging period for Emerging Markets corporate earnings Dividend* 4.90p Source: Annual Report and Accounts. J.P. Morgan Asset Management. Data as of 31 July 2017. Total Dividend for last financial year (per share). Past performance is not necessarily a reliable indicator for current and future performance. 9
Performance attribution JPMorgan Global Emerging Markets Income Trust plc - Year ending 31 July 2017 Attribution summary Benchmark Stock: -6.81 Country: -0.50 MSCI Emerging Markets Index (Net) Country attribution (%) Sector attribution (%) Attribution summary Benchmark Stock: -4.72 Sector: -2.59 MSCI Emerging Markets Index (Net) Philippines (u) Chile (o) Hungary (o) Turkey (o) Qatar (u) Malaysia (u) Indonesia (u) Thailand (o) Russia (o) India (u) Czech Republic (o) South Africa (o) Poland (u) Mexico (o) South Korea (u) Brazil (o) Taiwan (o) China (u) Cash -4.57-0.06-0.15-0.24-0.31-0.32-0.92-1.16-1.22-1.96-0.36 0.39 0.38 0.35 0.35 0.20 0.17 0.14 0.13 Stock selection Asset allocation -6.0-3.0 0.0 3.0 6.0 Gearing (s) 1.97 Industrials (u) 0.33 Health Care (u) 0.27 Energy (u) 0.04 Utilities (o) -0.22 Real Estate (u) -0.26 Consumer Discretionary (o) -0.26 Materials (u) Consumer Staples (o) -0.60-0.83 Stock selection Asset allocation Telecoms (o) -1.10 Financials (o) -1.41 Information Technology (u) -4.87 Cash -0.38-7.0-3.5 0.0 3.5 7.0 Source: J.P. Morgan Asset Management, MSCI, Factset, gross of fees in GBP to 31 July 2017. Data for Total Attribution shown (stock selection plus country allocation). Attribution may not match official returns due to differences in systems, rounding. 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. 10
Performance attribution JPMorgan Global Emerging Markets Income Trust plc - Year ending 31 July 2017 Stock attribution Attribution summary Benchmark Stock: -6.81 Country: -0.50 MSCI Emerging Markets Index (Net) Top 10 Contributors Relative weight (%) Stock return (%) Impact (%) Top 10 Detractors Relative weight (%) Stock return (%) Impact (%) OTP Bank 1.70 56.57 0.39 Turkiye Petrol Rafinerileri 0.80 60.34 0.37 Banco Santander Chile 2.77 43.41 0.35 GD Midea Holding Co 1.86 49.67 0.33 TISCO Bank Public Co* 1.68 50.91 0.33 Fuyao Glass Industry Group Co 2.65 40.52 0.29 Steinhoff -0.37-18.12 0.18 Lukoil 1.63 15.79 0.17 Anglogold Ashanti -0.12-53.19 0.16 Korea Electric Power Corporation -0.25-24.41 0.15 Tencent -3.80 68.53-1.21 Alibaba -2.82 89.20-1.21 Kimberly-Clark de Mexico 2.48-7.06-0.85 ENGIE Brasil Energia 1.80-8.20-0.61 Samsung Electronics -2.43 61.29-0.61 HKT Trust & HKT* 1.53-11.40-0.60 Coal India 1.17-20.27-0.55 BB Seguridade 2.36 0.43-0.51 KT&G Corporation 1.71-1.70-0.49 Woolworths Holdings 1.27-14.62-0.45 Source: J.P. Morgan Asset Management, MSCI, Factset, gross of fees in USD. Attribution may not match official returns due to differences in systems rounding. 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.*not in Benchmark. Past performance is not a reliable indicator of current and future results 11
Natural rotation in yield universe Reduced Samsung Electronics (Korea) We bought in 2015 when capital return policy improved Stock has participated in technology rally and has rerated Natural candidate to reduce as dividend yield declines New purchase of Sberbank (Russia) Strong fundamentals but ignored by market (flat return year-to-date) Dominant banking franchise in Russia Company has been building strong capital position Dividend yield plus dividend growth The companies above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. The use of their logos is in no way an endorsement of those companies by J.P. Morgan Asset Management nor is it intended to indicate an endorsement of J.P. Morgan Asset Management by those companies. 12
Key markets 13
Portfolio characteristics JPMorgan Global Emerging Markets Income Trust plc as of 30 September 2017 Portfolio Fund Index Price to earnings (forward) 12.9x 12.4x Price to book 2.5x 1.8x *Gross prospective dividend yield 4.9% 2.6% Return on equity 19.6 14.8 **Net Debt to Equity 12% 27% Beta 0.87 (0.94 geared***) Holdings 70 817 Active share 89.8 Source: UBS PAS, PRISM. The above portfolio characteristics are shown for illustrative purposes only and are subject to change without notice. Forecasts are not a reliable indicator of future performance. *Portfolio yield is the aggregate weighted sum of the stock level yields which are calculated (12-month forward DPS / Current price) *100. **Net debt to equity ratio excludes financials. *** as of 31 August 2017 14
GTM UK Improving corporate earnings 57 GTM Europe Page 59 EM earnings expectations by region Consensus EPS for next 12 months, US dollar, rebased to 100 in 2006 210 190 EM Europe Ratio of positive to negative JPM Revisions 40% 20% Analyst Sentiment 6 per. Mov. Avg. (Analyst Sentiment) 170 150 130 110 90 EM Asia 0% -20% -40% -60% -80% 70 EM Latin America 50 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 Source: IBES, MSCI, Thomson Reuters Datastream. J.P. Morgan Asset Management. EPS is earnings per share. (Bottom right) FactSet, MSCI, J.P. Morgan Asset Management. Guide to the Markets - Europe. Data as of 30 September 2017. -100% 31/08/2011 30/11/2011 29/02/2012 31/05/2012 31/08/2012 30/11/2012 28/02/2013 31/05/2013 30/08/2013 29/11/2013 28/02/2014 30/05/2014 29/08/2014 28/11/2014 27/02/2015 29/05/2015 31/08/2015 30/11/2015 29/02/2016 31/05/2016 31/08/2016 30/11/2016 28/02/2017 31/05/2017 31/08/2017 Source: J.P. Morgan Asset Management Data as of 31 August 2017 15
JPMorgan Global Emerging Markets Income Trust - Summary We continue to believe an income approach can deliver sustainable total returns Emerging Markets company fundamentals appear to be improving after a challenging period Our large, experienced team of analysts provide key inputs into over 1,000 Emerging Markets stocks We remain focused on implementing our disciplined process to capture the opportunities within yield stocks in Emerging Markets 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 constructed as investment advice. Investment in emerging markets may be more volatile and therefore risk to your capital could be greater. Emerging Markets may be subject to increased political, regulatory and economic instability, less developed custody and settlement practises, poor transparency and greater financial risks. Emerging market currencies may be subject to volatile price movement 16
Investment objective and risk profile JPMorgan Global Emerging Markets Income Trust plc Investment objective The Company s investment objective is to provide investors with a dividend income combined with the potential for long term capital growth from a diversified portfolio of emerging markets investments. Risk Profile Exchange rate changes may cause the value of underlying overseas investments to go down as well as up. Investments in emerging markets may involve a higher element of risk due to political and economic instability and underdeveloped markets and systems. The trust may invest in smaller company shares, which can be more unpredictable and less liquid than shares of larger companies. Dividend income payments are not guaranteed and may fluctuate. Please refer to the Investment Trust Profiles Document for more information relating to the Trust. 17
J.P. Morgan Asset Management This is a marketing communication 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 products or underlying overseas investments. Past performance and yield are not reliable indicators of current and future results. 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 products, 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. To the extent permitted by applicable law, we may record telephone calls and monitor electronic communications to comply with our legal and regulatory obligations and internal policies. Personal data will be collected, stored and processed by J.P. Morgan Asset Management in accordance with our EMEA Privacy Policy www.jpmorgan.com/jpmpdf/1320694304816.pdf. Investment is subject to documentation (Investment Disclosure Document, Key Features and Terms and Conditions), copies of which can be obtained free of charge from JPMorgan Asset Management (UK) Limited. This communication is issued by JPMorgan Asset Management (UK) Limited, which is authorised and regulated in the UK by the Financial Conduct Authority. Registered in England No: 01161446. Registered address: 25 Bank Street, Canary Wharf, London E14 5JP. be1616d0-ce00-11e7-af91-005056960c8a 18