JPMorgan Elect has published its interim results. For the half year ended 29th February 2016, the total return on the company’s net assets was -1.3% for the Managed Growth portfolio and -1.1% for the Managed Income portfolio. The total return on the Managed Cash portfolio was +0.3%.
The Managed Growth portfolio has delivered a total return on net assets of -1.3%, compared with the portfolio’s benchmark which delivered a total return of +1.8%. The share price total return was -1.1%. They say this under-performance was principally accounted for by the widening of the discounts on investment trusts, which form the majority of the holdings in this portfolio.
The Managed Income portfolio produced a total return on net assets of -1.1% during the half-year compared to a decline of -0.8% in the value of its benchmark. The Board declared dividends of 1.70p per share for the half year, unchanged from the same period last year. The statement says, as previously foreshadowed, the threat to this share class is the poor trading conditions for oil and other commodity companies which have provided a significant proportion of the portfolio’s income over the past few years. Recent dividend cuts by leading companies mean the Managers now believe that it is possible that the total dividends paid by the market may fall in aggregate this year. The Managers have repositioned the portfolio, selling some holdings where dividend cuts have or are likely to take place and increasing holdings in those companies which offer greater dividend security and the prospects of income growth. The Board remain committed to their aim of raising dividends in excess of inflation for this year.
The Managed Cash portfolio’s primary objective is to preserve capital through investments in high quality liquidity funds with AAA ratings as measured by Standard & Poor’s, or an equivalent rating agency. The Bank of England base rate has remained at 0.5% and the returns generated by the portfolio’s underlying money market funds therefore continue to be low, providing a total return on net assets of +0.3% with a 0.0% return to shareholders. The Board expects the returns from the Managed Cash portfolio to remain relatively unappealing in the near term.
The best performing funds in the Managed Growth portfolio were Finsbury Income & Growth and Jupiter European Opportunities. By far the worst performing fund in the portfolio was Biotech Growth trust which fell by 24.9%.
In the Managed Income portfolio, They say, frustratingly, in the half year period they did not own either SABMiller or BG Group, both of which were recipients of takeover approaches. This cost 0.85% of relative performance alone. Of the stocks that they did own, Halfords fell on weak results, British Land sold off on concerns over the London office market and Next was weak due to slower sales thanks to the unseasonably warm weather in the run up to Christmas. The single biggest positive contributor to returns was Imperial Brands (previously known as Imperial Tobacco). The earnings prospects for the company have improved following the acquisition of various US brands. The cash return potential of the company is also very attractive. The long term holding in WH Smith was also beneficial as growth in its stores in airports and train stations offset slower growth on the High Street. The company also benefited from the new, if unusual interest in adult colouring books. KCOM, which provides telecom services in Kingston (Yorkshire), boosted portfolio returns as the market welcomed the sale of its fibre optic cable network and rewarded strong results and a healthy dividend.
JPE : JPMorgan Elect results show small falls in NAVs