JPMorgan Asia Growth & Income (JAGI) sounds confident as it prepares for its next three-yearly continuation vote in February after a strong set of annual results following the reorganisation of its fund management team last year.
Rebounds in China, Singapore, Taiwan and Korea in the second half of the financial year more than offset problems in Indonesia to generate a total investment return of 19.9% in the 12 months to 30 September that beat the 16.8% gain from the MSCI Asia Pacific index.
The £298m investment trust’s underlying return included 23.6p per share in dividends, up from 16p last year following the hike in distributions to 1.5% a quarter, up from 1% previously.
Shareholders’ actual total return from the 5.3%-yielder was 23.9%, the higher figure due to the shares narrowing the gap – or discount – to net asset value (NAV) from 11.2% to 8.7%. This was in response to improved investor sentiment to Asia and the company buying back 10.8m, or 13.7%, of its shares as it targeted a discount between 8% and 10%.
The buybacks of cheap stock added 5.4p to NAV per share that ended the financial year at 475.4p.
The outperformance delivered by fund managers Robert Lloyd and Pauline Ng, who took over after former lead manager Ayaz Ebrahim left to run JP Morgan Asset Management’s business in Singapore, lifts the three-year underlying asset return to 46.3%, ahead of the benchmark’s 38.9%, and underpinning a 49.9% total return for shareholders.
While five-year shareholder returns of 28.6% to September lag the MSCI index’s 31.2%, over ten years shareholders would have received a total of 223.2% from capital growth and reinvested dividends, well ahead of the 154.3% from the Asia Pacific benchmark.
With the board and managers optimistic about prospects now that uncertainty over US tariffs has waned, the improved performance means an upset at the annual general meeting looks unlikely. The previous continuation vote in 2023 saw almost unanimous support for the trust remaining with 99.97% of shareholder votes.
Chair Sir Richard Stagg said: “While, as ever, geopolitical and market risks persist, the board is confident in the portfolio managers’ ability to navigate these challenges and continue to deliver attractive returns to shareholders.”
Lloyd and Ng said China’s relatively strong growth should continue to support activity across a region benefiting from the advance in artificial intelligence (AI). “Markets will gain further impetus from widespread improvement in shareholder returns and from earnings growth driven by Asia’s position at the centre of the AI revolution. Furthermore, the rapid development and penetration of AI should boost productivity and cut costs across most sectors for years to come.”
The trust’s top four holdings are TSMC, Taiwan’s global leader in chip manufacturing, Chinese social media and e-commerce giants Tencent and Alibaba, and South Korea’s Samsung Electronics which is integrating artificial intelligence across all its products under the banner of “AI for All”.
Our view
QuotedData’s head of research, James Carthew, said: “A great set of results from JAGI as it extends its long-term lead over the benchmark and its new dividend policy kicks in. The discount has been narrowing but these good numbers and the positive outlook that the board and the managers see for Asia and the trust ought to encourage more progress on that front.”
