JPMorgan Multi-Asset Growth & Income (MATE) announced annual results for the year ended 28 February 2023. The company recorded a negative total return of -5.3% on its opening net asset value, an underperformance of 11.3% for the year, compared to the benchmark. The company’s share price returned -1.5% during the period as the discount to net asset value narrowed, despite the prevailing trend over the year of widening discounts across the investment trust sector. Although the underperformance is disappointing, it should be noted that the company’s reference index is a total return of 6.0% per annum measured over a rolling five-year period. Therefore, unlike a typical benchmark, it is not a relative index and is unaffected by the extremely challenging market conditions experienced during this reporting period.
Commenting on the performance, the manager noted:
“The most significant driver of negative performance was our fixed income exposure, with our government bond positions in aggregate suffering significant decline. While we maintained a lower exposure to equities on average through the year relative to longer term averages, our aggregate equity exposure also provided a negative contribution to return, driven by our emerging market exposure and our decision to reduce overall European equity exposure. Our global equity manager performed well ahead of the broad equity market over the period, generating positive absolute returns. In an environment where broad equity and fixed income markets struggled, our alternative fund holdings generated positive returns, proving their diversification benefit.”
Discussing the backdrop, chairman Sarah MacAulay added:
“2022 was a difficult year for global equity and bond markets. Post Covid supply chain issues and tight labour markets, combined with a surge in demand post the pandemic, created inflationary pressures which were then significantly heightened by the Russian invasion of Ukraine elevating global energy and commodity prices. Inflation has remained at persistently higher levels than initially expected and the resolve of most central Banks to tackle the issue with increased interest rates have been the prevailing features of many of the world’s major economies in this reporting period. Equity and bond markets fared poorly in this environment as economic growth forecasts and corporate earnings expectations have been successively revised downwards. Heightened geopolitical tensions have further depressed investor sentiment.”
Still, she remains optimistic that MATE can manage this challenging period, continuing:
“In recent months, at the start of the current calendar year, global markets had found renewed optimism on the back of China’s successful emergence from its zero-Covid policy and the prospect of peaking inflation and interest rates. However, post the company’s financial year end this enthusiasm has been swiftly dampened by the challenges to the financial system caused by the failure of Silicon Valley Bank and Credit Suisse in March, and the subsequent turmoil in the US regional banking sector. Furthermore, geopolitical tensions continue to unsettle equity markets with Russia’s aggression against Ukraine, China’s lack of condemnation of Russia’s invasion tactics, and difficult US/China relations over Taiwan, US sanctions and US technology transfer to Chinese companies. In such uncertain markets the board has confidence in the breadth and depth of the investment expertise of the JPMorgan Multi-Asset team. The investment managers have the knowledge and experience to allocate across a wide range of asset classes to adapt to this challenging economic outlook. The investment trust structure facilitates a long-term investment outlook and the company’s progressive dividend policy should provide some reassurance to shareholders in the current environment of exceptionally high levels of inflation.”
MATE: JPMorgan Multi-Asset Growth & Income misses benchmark but maintains stability