Reorganised JPMorgan European off to good start

JPMorgan European Growth and Income has published its first set of results since its reconstruction earlier this year. Over the 12 months ended 31 March 2022, the total return to shareholders for the ordinary shares was 7.5%. Shareholders benefited from some discount narrowing and the share price return was 9.8%. Both were ahead of the 5.5% return generated by the benchmark. The chairman says that the main reason for higher performance than the benchmark is stock selection, helped by the improved market sentiment towards the company’s investment style.

In the period prior to the restructuring, the dividend paid per Growth share was 2.50 pence (2021: 4.45 pence) and on the Income share was 4.20 pence (2021: 6.70 pence). The reduction of the Growth and Income share dividends in the year under review arises because the Growth and Income shares were merged during the restructuring on 4th February 2022. Following the restructuring in the year under review, the dividend paid on the new ordinary shares was 1.10 pence.

Extract from the managers’ report

The portfolio outperformed its benchmark index with the NAV rising 8.7%, with most of the excess coming from positive stock selection. Given the strong rise in energy and commodity prices during the year the fund’s holding in Equinor, the Norwegian oil and gas company formerly known as Statoil, doubled during the year. Boliden, a Swedish mining company with exposure to copper, appreciated almost 50%. Both companies were trading on low valuations and started to see analysts raising their forecasts as commodity prices soared which is a potent combination.

As the market became increasingly concerned about the sustainability of the economic recovery the fund benefitted from its exposure to the more defensive side of the market. Novo Nordisk, a Danish pharmaceutical company focusing on diabetes therapies and obesity treatments, continued to beat expectations despite some initial problems with the roll out of a new anti-obesity product, Wegovy, in the US. Ahold Delhaize, which is a Dutch food retailer with extensive outlets in both Europe and the US, proved similarly defensive.

Despite the marked underperformance of highly rated growth companies, particularly in the technology sector, as real interest rates started to rise, it was gratifying that some of our positions continued to perform well. ASM International is the global leader in atomic layer deposition, a semiconductor technology that has been a key enabler of Moore’s law in the last decade. Capgemini, the largest European IT Services company and SESA, an Italian distributor of IT solutions, contributed again this year, particularly in the first half. In relative terms we also benefitted from not owning some of the large technology stocks such as Prosus which fell 50% during the year.”

JEGI : Reorganised JPMorgan European off to good start

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