JPI, JPIU : JPMorgan Income & Capital underperforms in first half
Over the six months to end August 2014 JPMorgan Income & Capital’s return on the portfolio was zero – a bit less than the 1.8% return on its benchmark (90% FTSE350 Index and 10% Barclays Capital Global Corporate Bond Index). Without any growth in the portfolio and with the asset value attributable to the zeros increasing at its normal rate, the ordinary shares experienced a loss of 3.4 pence per share.
On the dividend front, the Board has declared two quarterly interim dividends on the Ordinary shares and the Units, each of 1.625p. The statement says they intend “in the absence of unforeseen circumstance, to maintain the current level of quarterly dividends to Ordinary shareholders and Unit holders for the remainder of the financial year ending 28th February 2015.”
One useful set of information they publish is the various hurdle rates for the company. This is the growth the portfolio has to deliver each year in order (1) to return the current share price to Ordinary shareholders when the Company winds up in February 2018 – at 31 August 2014 this was 1.7% per annum; (2) to return an Ordinary share price of 100.0 pence was 2.4% per annum; and (3) to return the Final Capital Entitlement of the ZDP shares of 192.13 pence was (12.9)% per annum – i.e. the portfolio could fall in value by this much each year and zero holders would still get their full entitlement.
In terms of which stocks made the biggest impact on the fund’s performance – they say Direct Line Insurance Group (the motor insurer) delivered better than expected results and good dividend growth, Provident Financial, Imperial Tobacco and British American Tobacco all contributed positively. Holdings in Foxtons, Tui Travel and DS Smith were unhelpful.