Latest statistics from the Association of Investment Companies’ Global Equity Income sector shows one trust is by far the best 10-year share price total return performer thanks to impressive asset growth and strong investor appetite for its winning strategy.

JPMorgan Global Growth & Income (JGGI) or ‘JGGI’ for short, comfortably tops the table over that period, having returned 254% over the past decade. This is substantially ahead of peers including Scottish American (SAIN), Henderson International Income (HINT) and STS Global Income & Growth (STS), which have delivered 185%, 108% and 103% respectively.

JGGI’s long-term investment strategy targets capital growth and an attractive dividend yield, thereby providing investors with the best of both worlds. This strategy has resulted in a consistent sector-leading long-term performance track record, with the trust successfully navigating volatile market conditions, which is why we added the name to our list of Great Ideas selections last September.

BUY INTO THE BEST GLOBAL IDEAS

Mergers with Scottish Investment Trust and JPMorgan Elect have contributed to the growth of JGGI’s assets – totalling the best part of £2 billion at last count – which has catapulted the company into the FTSE 250 and given it greater scale, which allowed for a significant reduction in charges. In addition, the board’s strict discount control policy has seen the trust return to trading at a slight premium, closer to its long-term average.

‘When we do these things (mergers), we go through a little bit of a discount for a short period,’ explains James Cook, who recently replaced Rajesh Tanna as co-portfolio manager to work alongside Helge Skibeli and Tim Woodhouse. ‘It was about a quarter while we did the Elect merger, and then that pretty quickly went back to a premium.’

GROWING FASTER THAN THE MARKET

He informs Shares that JGGI’s objective is to provide superior total returns and outperform the MSCI All Country World index over the long-term by investing in the managers’ best global ideas.

The trust pays quarterly distributions that are set at the beginning of each financial year and, on aggregate, the intention is to pay dividends totalling at least 4% of the fund’s net asset value at the time of announcement. This can be topped up using the trust’s capital reserves in the event of a shortfall.

Bottom-up stock pickers Skibeli, Woodhouse and Cook are focused on building a high conviction portfolio of 50 to 90 stocks, drawing on an investment process underpinned by fundamental research. ‘This is a core portfolio,’ continues Cook, ‘so we want to be able to give a balance between growth and income which allows us to perform relatively well through these big style regimes.’ This focus on identifying compelling individual investments rather than concentrating on any specific sector has resulted in a reassuringly diversified portfolio.

‘What we are trying to achieve at a portfolio level is give you superior quality of earnings,’ enthuses Cook, an investor in high-quality, cash-generative companies with strong balance sheets and ‘high barriers to profitability, so your Amazon (AMZN:NASDAQ) of the world where a huge amount of capital has been spent in these businesses. Other companies wouldn’t be able to spend anything close to that capital, and even if they did, the barriers to profitability would be even higher.

‘We want to be able to find stocks with plenty of growth for years to come and get them at a better price than the market. That’s the hard part, that’s what makes us unique.’

One of the trust’s competitive advantages is the managers’ ability to tap into the analysis of JPMorgan’s experienced global research team. 

‘I think our research breadth is unrivalled, we spend $150 million on fundamental research, we make over 5,000 company interactions a year and we’re covering 2,500 stocks,’ he says. ‘And less than 3% of the stocks we look at make the final portfolio.’

WHAT’S IN THE PORTFOLIO?

Boasting a five-star Morningstar rating, JGGI is invested in technology giants including Meta Platforms (META:NASDAQ) Amazon and Microsoft (MSFT:NASDAQ), the latter ‘fast becoming the leader in cloud computing where we see enormous levels of growth for many years to go, and then you’ve got the additional AI kicker’.

Also in the top 10 are the likes of GPU designer Nvidia (NVDA:NASDAQ), the world’s largest contract chipmaker Taiwan Semiconductor Manufacturing Company (TSM:NYSE), healthcare and insurance company UnitedHealth (UNH:NYSE), payment processor Mastercard (MA:NYSE), beverages behemoth Coca-Cola (KO:NYSE) and derivatives exchange CME (CME:NASDAQ).

‘We’re very focused on free cash flow generation,’ stresses Cook, ‘more so than earnings because at the end of the day, shareholders get the free cash flow not the earnings.’ Given this emphasis, the bulk of JGGI’s investments are in high-quality franchises, but to give shareholders that balance of income, the trust also offers exposure to sectors such as utilities, which enhance the dividend yield and aids performance through market and economic cycles according to Cook.

‘Over the last four, five years, we’ve delivered through the cycle. We want to have that balanced portfolio, so our excess return is independent of the style regime we’re in, so whether that is a growth or value regime, or risk-on, risk-off,’ he explains.

Addressing the stake in Coca-Cola, Cook concedes the drinks colossus is relatively mature, but that gives the company ‘great pricing power’ and means the stock is a source of robust dividends. ‘We haven’t seen a huge amount of competition in that field compared to alcoholic beverages for example. A can of Coke is 70p versus say a £70 bottle of whiskey, so if the consumer does go through a recession, we know where they are going to be taking their money from first.’

Outside of the top 10, JGGI offers exposure to an array of names ranging from energy giant Chevron (CVX:NYSE) and luxury goods leviathan LVMH (MC:EPA) to a new holding, Teradyne (TER:NASDAQ), which provides semiconductor testing solutions and the development of collaborative robots that are set to increase efficiencies across manufacturing processes.

Also nestling in the portfolio is ride-hailing company Uber (UBER:NYSE), which the managers believe offers a diverse source of growth through its delivery business as well as a counter-cyclical play in a recession as that could create easy access to a growing supply of drivers.

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