JPMorgan Asia Growth & Income (JAGI)

08/12/2021

Results analysis from Kepler Trust Intelligence

JPMorgan Asia Growth & Income (JAGI) has reported strong NAV returns for the year ending 30 September 2021. The NAV total return was 13.7% compared with 9.7% for the MSCI AC Asia ex Japan benchmark. However, the shareholder total return was lower at 3.6% as the shares moved from a small premium to a discount of 8.3%. That discount has since closed, and JAGI traded on a premium of 0.6% as of 06/12/2021.

US Returns were strong for the trust and index until mid-February, since then the NAV has declined. This has been driven by a sell-off in China due to concerns about regulatory interference, a speculative bubble in the real estate market and a slowdown in growth.

Kepler View

In our view JAGI's strong results burnish its credentials as a potential core holding for growth or income investors. While the trust performed strongly in the first part of the year, it is pleasing to see it held its own in the sell-off. While some of JAGI's largest long-term positions underperformed after February, other positions held the fort, showing how a diversified, long-term stock-picking strategy can work well if the right stocks are picked. The focus on the long-term and on picking stocks rather than timing the market are disciplines that we think should serve an investor well over the long-term and increase the chance of generating outperformance.

For income investors, one of the key attractions is the diversification offered. As well as the obvious geographical angle, JAGI's ability to pay a dividend from capital means it can invest in low-yielding companies with great growth potential, offering income investors a way to enjoy their income without having to sacrifice capital growth.

The fate of China will continue to be critical for Asian markets. Alone it makes up over 38% of the trust's benchmark and over 45% when Hong Kong is included. The news flow is very negative around the country at the moment, but that is often a good time to buy…

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