Outperforming its benchmark since 2019: JPMorgan Global Growth & Income

JGGI has outperformed its benchmark in every calendar year since 2019…

Overview

JPMorgan Global Growth & Income (JGGI) aims to provide investors with a core, all-weather portfolio by investing in companies that exhibit superior quality of earnings and faster growth while trading at valuations in line with the broader market.

JGGI has seen its assets grow substantially in recent years, from £723m at the start of 2022 to £3bn at the time of writing. This growth has resulted from a combination of strong returns, with JGGI outperforming its benchmark in every calendar year since 2019, as well as its sector peers over five years (to 04/03/2025), and successful corporate activities, with JGGI absorbing three investment trusts since 2022. Subject to shareholders’ approval, JGGI is also expected to combine with Henderson International Income Trust (HINT), with the deal anticipated to conclude by July 2025.

The strategy and its managers will remain unchanged, and shareholders are expected to be largely insulated from the costs associated with the transaction. Moreover, this combination will grow JGGI’s assets to approximately £3.4bn, reinforcing its position as the largest investment trust in the AIC Global Equity Income sector and adding to the liquidity of its shares. Due to its significant market capitalisation (c. £2.8bn), JGGI also benefits from scale and is the cheapest trust in its AIC sector, with an OCF of 0.43%, expected to fall to 0.42% following the combination. JGGI is not currently geared (as of 28/02/2025) and has historically used gearing conservatively.

JGGI’s differentiated dividend policy will also be maintained. Unlike many income strategies, JGGI pays Dividends from both the income generated by its holdings and its large capital reserves, allowing flexibility to invest in companies offering low or no yield. Dividends are paid quarterly, with the board aiming to distribute an income amounting to at least 4% of the trust’s NAV as of the previous financial year-end (ending 30 June). As of 04/03/2025, JGGI offers a prospective yield of 4.1%.

Over the past 12 months, the managers have positioned the portfolio with a ‘barbell approach’, allocating to both ‘high-growth cyclicals’—such as technology stocks that have benefited from the recent AI enthusiasm—and ‘low-growth defensives’, which includes categories such as ‘steady stalwarts’, ‘healthcare’, ‘defensive consumer’, and ‘defensive infrastructure’ that have been overlooked by investors in recent years, and are therefore trading on historically low valuations.

Analyst’s View

 
In our view, JGGI’s outperformance of its benchmark, the MSCI ACWI Index, in every calendar year since 2019 is particularly impressive, given the varying market environments over this period. We think it is worth noting that this outperformance was driven by stock selection rather than sector or country allocation, highlighting the managers’ stock-picking skills. We are also impressed by the extensive team of seasoned analysts working alongside the managers, each specialised across sectors and geographies. In our view, this depth of expertise is hard to match and gives JGGI a competitive edge in stock selection.

We believe JGGI’s flexible dividend policy, allowing the trust to pay dividends from both the income generated by its holdings and its sizeable capital reserves, is an attractive feature of the trust, as it provides significant flexibility. For instance, this allows JGGI to hold stocks with low or no yield, which more traditional income strategies may not be able to hold. However, shareholders may receive a lower dividend if the NAV falls from year to year.

Moreover, we believe that the combination with HINT will reinforce JGGI’s position in the AIC Global Equity Income sector. With a market capitalisation of approximately £3.1bn, the trust is already large enough to be investable by wealth managers, institutional investors, and retail investors. However, a larger asset base, reduced competition, and competitive fees may ensure that JGGI continues to experience strong demand for its shares.

The trust has traded at an average premium of 1.5% over the past five years, we believe reflective of JGGI’s consistent outperformance. Additionally, the board has been proactive in managing the premium, aiming to keep it below 2% by issuing shares to meet investor demand.

Bull

• Impressive track record of outperformance of the benchmark across different market environments
• Ability to pay dividends from capital allows for a more flexible investment strategy compared to income-focussed peers
• Combination with HINT should reduce OCF and further reinforce JGGI’s profile

Bear

• May lag some sector peers in a value-driven market environment
• Trades at a narrower discount than most sector peers
• Dividend may experience some volatility in tandem with NAV

See the full research into JPMorgan Global Growth and Income here >

_{Disclosure – Non-Independent Marketing Communication. This is a non-independent marketing communication commissioned by JPMorgan Global Growth & Income . The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.}