Stock selection and exposure to structural themes: JPMorgan China Growth & Income

JCGI has had a solid twelve months. It’s NAV and share price total returns of 8.1% and 9.3% (to 30/07/2026) left the MSCI China Index’s 4.1% decline well behind (see Performance). Technology holdings were the standout, with MiniMax, Sieyuan Electric and two out-of-index Taiwanese names, TSMC and MPI, among the key contributors, each benefitting directly or indirectly from the structural tailwinds around AI and related infrastructure the portfolio had been deliberately positioned to capture. Whilst 2026 has been a tougher environment, JCGI has outperformed a declining index, which we think speaks to the quality of the underlying stock selection.

Rebecca Jiang and team have built the portfolio around high-quality businesses across Greater China, targeting those they believe to boast durable competitive advantages and the potential for strong returns on capital over time. The managers have been active over the past year, buying new names including CGN Mining, which supplies uranium to nuclear power plants and broadens the portfolio’s renewable energy exposure, whilst also adding to their highest-conviction existing holdings. Regarding the latter, following shareholder approval at the February 2026 AGM, an amendment to the investment policy now allows the managers to take larger positions in individual names, which saw the managers top up their holding in Tencent, building the position to approximately 15.8% of the Portfolio.

On income, JCGI’s NAV-linked enhanced Dividend policy is on track to deliver a full-year dividend of 13.56p, up 24.2% on the prior year, reflecting the growth in NAV over the period. This, and the trust’s strong recent performance, has seen JCGI’s Discount narrow toward its own five-year average of 8.8% but remains wider than the sector simple average of 7.0%.

We believe China’s investment case has strengthened considerably over the past year, yet its valuation still does not fully reflect its long-term potential. Despite a strong 2025, Chinese equities continue to trade well below developed market peers on most conventional valuation metrics and broadly in line with their own five-year average. That looks increasingly difficult to justify given the structural themes playing out across the country that are not only compelling in their own right but are now being actively supported by government policy.

The 15th Five-Year Plan provides a solid blueprint through to 2030, targeting GDP growth, AI development, renewable energy transition and a rebalancing towards domestic consumption, giving real institutional weight to what were already powerful long-term drivers. We think JCGI is a strong vehicle through which to access that opportunity. Rebecca and Li’s preference for quality companies mean JCGI’s portfolio is well-represented toward the parts of China’s economy where the country is establishing genuine global leadership, notably technology, industrials and internet platforms, and away from value-heavy, SOE-dominated sectors that they believe lack structural growth. Further, the amended investment policy allows the managers to back their highest convictions more fully, which could help capture more of this opportunity, though this change means the portfolio could become more concentrated at times, introducing greater single-stock risk.

Geopolitical uncertainty, particularly US–China trade tensions and the ongoing Middle East conflict, remains a legitimate concern. But China’s scale and global importance, alongside evolving corporate landscape and long-term structural growth potential remain as relevant as ever. For investors willing to take that view, we believe JCGI offers access to that opportunity, alongside a differentiated income stream not traditionally associated with the region.