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JPMorgan Mid Cap has recovered its underperformance

JPMorgan Mid Cap performs well in choppy waters

JPMorgan Mid Cap has recovered its underperformance relative to its benchmark since 30 June – JPMorgan Mid Cap has published results covering the year ended 30 June 2020. The NAV total return was -14.0% and the share price total return was -15.0%. For the same period the return from the benchmark, the 250 (excluding investment trusts) Index, was -13.3%. The fund has made up this underperformance since 30 June.

Revenue for the year fell by 43.8% to 19.7p per share. The board is using revenue reserves to maintain its dividend payment at 29.5p for the full year. It will still have 30.4p per share left in its revenue reserve after that.

Extract from the managers’ report

The key contributors to performance in the year were a number of our largest high conviction holdings. These included Games Workshop, Spirent, Dunelm, JD Sports, Future and Computacenter. We also benefitted from the take-overs in the first half, of Greene King and EI Group, two pub companies which we were grateful that we did not still own during lockdown. The main underperformers were those companies perceived by the market to be hard hit by COVID-19, namely Dart Group (the parent company of Jet2), Cineworld, Vistry (formerly Bovis Homes) and OneSavings Bank. We maintain our holdings in all of these, and have added to both Dart and Vistry after their share price declines.

The impact of COVID-19 on the portfolio was significant in February and March, as certain sectors such as travel and leisure and retail were dramatic underperformers. In response to the pandemic we made a number of changes to the portfolio. However, key to our approach was to maintain a balance within the portfolio. We aimed to own those companies that would not be too hard hit by the lockdown, or indeed might benefit from it, together with those that despite suffering a significant impact in the period we believed to be very oversold and hence very undervalued. We also analysed and held within the portfolio those companies we considered would not only survive, but come out the other side stronger and with better competitive environments. Examples of companies where we increased our position as prices fell include Future, Dunelm, Computacenter, Dart and two housebuilders, Vistry and Bellway. New additions to the portfolio, which should benefit from recent events, included Kingfisher and Travis Perkins, (exposed to the growth in DIY), Team 17, (video gaming), Boohoo (online clothing retail) and Centamin (a gold producer). We exited a number of holdings including Capital & Counties (London real estate), Premier Oil, SSP (exposed to train and plane travel) Go-Ahead and Trainline (both with rail exposure). The result of these changes, plus changes to the benchmark composition over the year, have led to the portfolio having significant underweight positions in financials (mainly real estate) and industrials, and large overweight allocations in both of the consumer and technology sectors.”

 

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