Asian income without the need to compromise on growth

JPMorgan Asia Growth and Income (JAGI) has a long-term track record of outperforming its benchmark, which is consistent with its focus on maximising long-term total returns. In February 2025, the trust introduced a new dividend policy, which enhances income even further. The manager says this does not impact its ability to select stocks for the portfolio.

Efforts are being made to reduce discount volatility through the use of share buybacks and there is the potential for increased demand for JAGI’s shares as a result of the revised dividend policy. The region could also benefit if investors decide to reallocate funds from the US to other regions that are expected to grow more quickly.

High income from Asian equities

JAGI invests in a diversified portfolio of equities quoted on the stock markets of Asia, excluding Japan, with the aim of maximising total returns for shareholders. An enhanced dividend policy targets regular quarterly dividends of 1.5% of quarter-end NAV (approximately 6% per annum).

Source: Morningstar, Marten & Co

Fund Profile

More information is available at the company’s website: www.jpmorganasiagrowthandincome.co.uk

JAGI was launched in September 1997 as JPMorgan Asian Investment Trust, a rollover vehicle for shareholders in The Fleming Far Eastern Investment Trust Plc. JAGI adopted its present name in February 2020.

JAGI’s co-portfolio managers are Robert Lloyd, based in Hong Kong, and Pauline Ng, based in Singapore (see page 22). The two managers have nearly 50 years of combined industry experience. They also have access to over 30 analysts focused on emerging markets and Asia (EMAP), as well as country specialists, and global and regional portfolio managers located in nine locations worldwide.

With the objective of maximising JAGI’s total returns, the trust has adopted an active, conviction-led approach to investing. The trust’s current dividend policy – discussed on page 19 – is designed to enables investors to receive an attractive level of income without the need to compromise the managers’ focus on maximising total returns.

Why JAGI?

Core Asian exposure with an attractive dividend yield

For some investors, JAGI could be viewed as a ‘core’ Asian equity holding but one that is able to offer a higher yield than might traditionally be expected. The total return focus means that the portfolio can have a greater exposure to fast growing companies than might usually be the case for a conventional high-income strategy.

Looking at all trusts in the AIC Asia Pacific equity sectors and IA Asia Pacific ex Japan sectors, JAGI’s newly enhanced yield places it within the top decile of income funds ranked by yield.

Market backdrop

Tariffs and trade

“Liberation Day” tariffs caused serious upset in markets and, after a hiatus, have now been reinstated

Tariff policies implemented by the US administration have received significant attention in relation to Asian markets. Initially, the US government indicated an intention to impose levies on imports from several Asian countries, citing trade imbalances in goods. The announcement led to a sharp decline in equity markets. Subsequent changes in policy direction and indications that some trade agreements were being negotiated appear to have contributed to a partial recovery in markets in the following months.

On May 12, China agreed to reduce levies on US imports to 10% in exchange for the US reducing its tariff rate on Chinese imports to 30%. This was a temporary agreement intended to last for 90 days (i.e. until around 10 August). Japan agreed to 15% tariffs on its exports to the US, while Indonesia and the Philippines settled on 19%, and Vietnam agreed to a 20% rate.

For those countries that have not yet reached an agreement, the deadline to reinstate the original 90-day pause on tariffs was 9 July, now extended to 1 August.

In the short term, a surge in exports to the US followed by a period of inventory stockpiling and unwinding may affect trade balances and GDP growth figures over the coming months. As Figure 1 indicates, despite exports contributing significantly to GDP, many Asian economies derive only a small (sub-10%) portion of it from trade with the US. India, for example, has an economy that is largely domestically oriented.

While there are outliers, much of Asia’s economy is not reliant on US exports

An increase in domestic consumption may partially counterbalance reduced demand from the US. In China, economic activity has been affected by a downturn in the property market, which has influenced consumer sentiment. The managers note that the government is taking steps to address excess property supply and may seek to accelerate those measures.

Companies may also be making preparations based on previous trade policy developments, including efforts to diversify supply chains.

Figure 1: Exports as a percentage of nominal GDP

Source: JPMorgan, data as of 2023

Figure 2:Performance of USD against Asian currencies over 2025

Source: Bloomberg

Currencies

A weaker dollar is usually seen as a good sign for Asian markets

The US dollar has been weakening against most currencies. This makes imports into the US more expensive, adding to the tariff impact. However, it could also have the advantage of reducing inflationary pressures. This could open the door to more supportive monetary and fiscal policy across Asia, and possibly fuel further domestic consumption growth. China, for instance, recently cut its interest rates and lowered banks’ reserve requirements.

Technology

US policies are spurring technological progress in Asia

Another concern of the Trump regime has been preserving the US technological lead over rivals. To that end, the administration has sought to restrict exports of certain computer chips, for example. However, in some areas Asian firms are catching up or even perhaps surpassing their US rivals.

Asia is home to global tech giants like Taiwan Semiconductor and Samsung. It appears that China is expanding its reach in AI, with the performance of DeepSeek’s LLM surprising markets earlier this year. China is also becoming a significant player in the electric vehicle market. It also leads in areas such as the production of solar panels.

Valuations

Figure 3: Asia P/E versus global markets

Source: Bloomberg. Data s of 31/05/2025

Figure 4: Asia EPS versus global markets

Source: Bloomberg. Data s of 31/05/2025

Asian equities are reasonably valued

However, despite boasting faster earnings growth than western peers, Asian equities tend to trade on cheaper valuations, as shown in Figure 3. Against a backdrop that suggests an increasingly challenging environment in the US, there is the potential for investors to increase their allocations to the region.

The managers observe that Chinese companies are exhibiting a greater focus on shareholder returns. They say that the emphasis is shifting from share issuance to buybacks and dividends are climbing.

Valuations of Indian companies are higher than those of most other Asian markets. However, the managers feel that the structural long term growth outlook remains attractive. It may also be that Japan, which does not form part of JAGI’s remit but nevertheless is a key market in Asia, could become more of an engine for growth in the region as governance reforms help make its companies more dynamic.

Process

The managers observe that Asia-Pacific is a diverse region of many markets seeing rapid change. They believe that finding the best income and growth opportunities demands exceptional resources and insight – on the ground and around the world.

J.P. Morgan Asset Management (JPMAM) describes itself as a leading specialist in Asia-Pacific equities. The co-managers of JPMorgan Asia Growth & Income are based in Hong Kong and Singapore. They are supported by approximately 80 members of the wider (EMAP) team, comprising global and regional portfolio managers, country specialists and analysts located in nine locations around the world.

Bottom-up, stock picking approach

From a pool of about 800 stocks under coverage, the aim is to build a portfolio of around 50–80 investments. The portfolio is built ‘bottom up’, with the managers picking stocks rather than allocating between countries and sectors. The investment process is designed to focus on what the managers believe are the long-term prospects of each investment, rather than being distracted by short-term noise.

Restrictions on portfolio weights

Returns are benchmarked against the MSCI All Countries Asia ex Japan Index. Relative to an open-ended fund with a similar remit, JAGI’s closed-end structure is suited to holding more illiquid positions. Following a review of the approach in 2024, the board encouraged the manager to increase the active share of the portfolio, invest in off-benchmark positions, and mid- and small-cap opportunities.

The managers are permitted to have a maximum active under- or overweight exposure to each country in the benchmark of 15%. The company will not invest materially more than 10% of the portfolio into a single stock or materially exceed a 3% under- or overweight exposure to a single stock.

At the end of June 2025, the largest stock in the benchmark was Taiwan Semiconductor Manufacturing (TSMC), with a weight of 11.6%. The next-largest was Tencent at 5.3%.

On that date, China represented 32% of the benchmark, India 21%, Taiwan 21%, South Korea 12%, and Hong Kong just under 5%. We show JAGI’s largest under- and overweight exposures relative to the benchmark on page 11.

Gearing is used within a range of 10% net cash to 20% geared (in normal market conditions).

Stock analysis

The analyst team seeks to assign each stock under research coverage a strategic classification based on an assessment of

1. Business economics (answering the question: does the business create value for shareholders?). The analysis aims to consider all of the factors that influence the amount of capital needed to run a business, the profits it makes by employing this capital, and the amount of capital that can be re-invested. These factors can be external to the company (macro and industry), or specific to it (company and management).
2. Duration (the extent to which these returns can be sustained). JPMAM believes that a company’s ability to sustain returns depends on a wide variety of factors: to have confidence in a company’s duration, it needs to consider the potential impact on the business of several risk factors, including macro, industry and company factors, as well as management choices. This involves assessing the longevity of competitive advantages, or economic moats, and vulnerability to disruption or policy shifts.
3. Governance. How will governance impact shareholder value? JPMAM examines this in two ways:

• by source (macro/industry/company/management) and
• by cause (competence and motives). As in, by distinguishing whether governance risks arise from external conditions, internal control structures, or managerial capability and alignment with shareholder interests.

Following this analysis, the analyst assigns one of four strategic classifications to a company.

1. Premium: Companies that have a sustainable advantage that allows for durable growth and sustained excess financial returns. These are best-in-class companies on an absolute basis, typically characterised by strong competitive positioning, high return on capital, and proven reinvestment capability
2. Quality: Companies where JPMAM assesses that intrinsic value can be created at a rate above a suitable cost of capital with acceptable risks, and that is unlikely to change within the forecast horizon, suggesting stable fundamentals and relatively predictable earnings and risk profiles.
3. Standard: Companies that are not challenged, but where JPMAM’s confidence in their long-term value creation is lower than for quality or premium companies, perhaps due to weaker competitive advantages, less consistent execution, or more cyclical exposure.
4. Challenged: Companies where the economics are below the cost of capital and unlikely to recover on a sustainable basis, or where there are significant concerns around duration and/or governance, indicating poor shareholder alignment, weak business models, or structural decline.

Proprietary quality and risk assessment

The second part of the process is for analysts to complete a standardised 98-question risk profile assessment for each stock. Any question to which the answer is ‘yes’ is counted as a red flag. Stocks with the most red flags are typically the most challenged. The managers say that this provides a ‘sanity check’ for their investment decisions and encourages risk awareness.

An assessment of aspects of ESG is integral to the investment approach. The managers stress the importance of understanding the potential for ESG factors to present potential challenges or opportunities that could significantly affect a company’s share price. Roughly two-thirds of the risk profile questions are governance-related – does the company issue excessive amounts of stock, for example.

Analysts calculate a financial materiality score for each stock. This focuses on industry-specific ESG issues (based on a classification of the universe that breaks it down into around 50 sub-sectors).

At the end of the process, there should be a 20–30 page document on each stock.

As examples, steel companies – operating in cyclical markets, faced with ESG issues, and often struggling to cover their cost of capital, tend to score lowly and have a lot of red flags. Another example is Pinduoduo, owner of Temu, which also does not score well.

By contrast, the team comment that TSMC with its high returns on capital, free cash flow, and unparalleled R&D budget, is rated as a premium stock. Tencent’s strong balance sheet (net cash) tips it towards the quality end of the spectrum they add.

The ratings tend to inform position sizes. However, the managers are free to back their conviction in a stock if they choose. They say that the best investments are not always the highest quality stocks. Sometimes, identifying a company that is likely to be upgraded from Standard to Quality or Quality to Premium can present an exciting investment opportunity, in their view.

Valuations based on normalised earnings potential

The last part of the investment approach is a determination of the valuation upside of a stock. Valuations are based on the analysts’ views on the normalised earnings potential of a company, factoring the trend of earnings growth, and an assessment of what market would pay for such a company. This calculation gives the expected upside/downside in each stock.

The managers use the example of Telstra – a leading mobile provider in Australia and a top 10 position in the portfolio. They believe that it offers a potential 10% return per annum for five years, factoring in its dividend yield and earnings growth forecasts.

The expected returns analysis provides a basis for comparing stocks on a like-for-like basis across different countries.

The managers apply a sense check over the shape of the portfolio to try and ensure that relative to the benchmark its holdings are not too exposed to individual factor bets.

Portfolio

Figure 5: JAGI asset allocation by country as at 30 June 2025

Source: JPMorgan Asset Management

Figure 6: JAGI asset allocation by sector as at 30 June 2025

Source: JPMorgan Asset Management

Figure 7:JAGI asset allocation by country relative to benchmark at 30 June 2025

Source: JPMorgan Asset Management

Figure 8:JAGI asset allocation by sector relative to benchmark as at 30 June 2025

Source: JPMorgan Asset Management

As Figures 7 and 8 show, JAGI’s country and sector asset allocation is not materially different from that of the benchmark.

Figure 9: JAGI portfolio characteristics as at 30 June 2025

The data shows that, on average, the stocks in JAGI’s portfolio are more expensive than those in the benchmark. The managers say that this reflects their higher return on equity and earnings growth.

Based on JPMAM’s analysis, the portfolio has a lower number of red flags than the benchmark. It also has a lower carbon intensity, which may be a consequence of the bias away from cyclical heavy industrial businesses.

JAGI’s active share could be higher

At 64.9%, JAGI’s active share is marginally higher than its level of 62.0% at end September 2024 (when the board was asking for it to be increased) but lower than it was at end September 2023 (68.7%). There is work to be done here (the goal is to get it to 70% over time), but the concentration of stocks in the benchmark and the in-built constraints around deviating too far from the index may have an impact here.

At 30 June 2025, 60.0% of JAGI’s portfolio was classified as ‘premium’ or ‘quality’ versus 40.7% for the benchmark. In addition, relative to the benchmark, the portfolio had an overweight exposure to very large ($30bn+ market cap) companies and small (sub $5bn) companies.

Given that the board has raised the issue of the portfolio’s active positioning relative to the benchmark, in the next section we have included the top 10 holdings as usual. TSMC, Alibaba, Tencent, Samsung Electronics, and HDFC Bank are the five-largest constituents of the benchmark and constitute five of JAGI’s six-largest positions.

It may be more informative to discuss JAGI’s largest over- and underweight positions relative to the benchmark index.

Top 10 holdings and largest over- and underweights

Figure 10: 10 largest holdings as at 30 June 2025

Figure 11: Largest overweight positions as at 30 June 2025

Figure 12: HKEX (HKD)

Source: Bloomberg

Hong Kong Exchanges and Clearing

Hong Kong Exchanges and Clearing (HKEX) (hkexgroup.com) is a global exchange provider, operating multiple different markets across equities, commodities, fixed income, derivatives, and currencies though is subsidiaries: The Stock Exchange of Hong Kong Limited (SEHK), Hong Kong Futures Exchange Limited and London Metal Exchange. Its pedigree is squarely rooted in Hong Kong, with the Hong Kong government being its largest shareholder.

While the JAGI team acknowledges the ongoing debate around the quality of the Chinese equity market, it says that there remain structural trends that are driving increased trading volumes – which directly translates in greater earnings potential for their exchanges, in their view.

Alibaba (which secured a primary listing in Hong Kong in August 2024) and Tencent (the second largest listing on the SEHK) have been buying back their stock rather than buying businesses, which may have boosted trading volumes.

There has been an increase in what the managers describe as high-profile listings (17 IPOs in Q1 2025, and 120 on the books as at end March 2025). Most recently, May 2025 saw the IPO of CATL (Contemporary Amperex Technology), which raised $5.3bn (the largest IPO globally in 2025 to date).

The Chinese EV sector is raising more equity; Xiaomi, which the managers think is already well capitalised, has been issuing stock in Hong Kong.

More Chinese companies are choosing to forgo a New York listing and instead are choosing Hong Kong, according to the managers.

Volumes on the China (Shanghai and Shenzen) Connect have been climbing, with Goldman Sachs predicting $110bn of southbound investor flows.

The managers say that the impact of these factors can already be seen in HKEX’s recent Q1 2025 results. The first three months of 2025 saw HKEX report record trading volumes, quarterly revenues, and profits. Revenues from its core businesses came in at HK$6.6bn, up 32% YoY, with profits of HK$4.1bn, up 37% YoY.

Figure 13:Alibaba (HKD)

Source: Bloomberg

Alibaba

Alibaba (alibaba.com) is one of China’s largest technology firms. While known for its e-commerce services (principally Taobao, Tmall, AliExpress), it also offers digital media and entertainment (Youku and Damai), logistics, and cloud-computing services.

JAGI’s managers say that market sentiment around Alibaba has become increasingly positive over 2025 – driven by a combination of improved shareholder alignment, positive results from its core businesses, and the tailwinds from its cloud and AI solutions. Alibaba currently has a share buyback scheme in place (running until March 2027); it repurchased $11.9bn worth of shares (5.1% of shares outstanding) over its financial year ended 31 March 2025.

For FY25, Alibaba delivered revenue growth of 6% and 5% earnings per share growth.

AI is a current focus for the company and on this front, Alibaba released its proprietary LLM Qwen2.5-Max in January this year. This is integrated into Alibaba’s Quark AI assistant. Alibaba plans to invest at least RMB380bn (£39bn) on AI and cloud computing over the next three years. While investors will look for a clear monetisation strategy for this investment, it appears that it is already having a positive impact on Alibaba’s revenues, as its Quanzhantui digital marketing tools make heavy use of AI. Management believes that the revenue growth of its cloud intelligence group (up 69% for FY25) will only accelerate thanks to the growth of AI.

Figure 14: Shinhan Financial Group (KRW)

Source: Bloomberg

Shinhan Financial Group

Shinhan Financial Group (www.shinhangroup.com) is a South Korean holding company whose subsidiaries provide a range of financial services including commercial banking, insurance, asset management, and investment banking.

Shinhan’s shares have rallied since April 2025. South Korean equities have rallied following the election of Korea’s new president who is widely viewed as business-friendly. For the first quarter of 2025, Shinhan’s profits were up 13% YoY (in line with market expectations), reflecting resilient fee income and stable interest income. However, its Q2 results came in ahead of expectations, with reported record profits of $2.5bn – reflecting a resilient interest income margin and a further growth in its non-interest incomes (e.g. income generated by fees and non-banking services). Shinhan also announced a larger than expected share buyback of ₩800bn to be completed by Q1 2026.

Figure 15: TSMC (TWD)

Source: Bloomberg

TSMC

TSMC (tsmc.com) is the world’s largest contract chip manufacturer, and by far the largest component of JAGI’s benchmark. TSMC is a significant force in the global technology sector, as it is responsible for 67% of the world’s semiconductor foundry output – raising to c.90% in the manufacturing of advanced chips. It has experienced strong growth in demand for NVIDIA chips.

TSMC appears to have been a beneficiary of the growth of AI. YoY revenue growth for Q1 2025 was 42%, EPS growth was running at 60%.

In March 2025, TSMC said it was planning to invest $165bn in the US to help meet the AI-related growth in demand for its chips (possibly to appease the administration in the US).

The company is guiding towards 20% CAGR of revenue and gross margins of at least 53% over 2024–2029. It believes it can earn an ROE of 25% through the cycle.

Figure 16: HDFC Bank (INR)

Source: Bloomberg

HDFC Bank

HDFC Bank (www.HDFC.com) is India’s largest private sector bank by assets. JAGI’s managers generally prefer India’s private-sector banks to its public sector ones, favouring those which they believe have good governance and strong deposit franchises – such as HDFC, KMB, and Bank of Central Asia. The managers say that these banks are trusted by their customers and have a reputation for looking after the interests of minority investors.

HDFC’s shares have rallied this year, more than recouping their December 2024 losses and pushing on to new highs. The bank has reported stronger interest margins, robust loan growth, and rising deposit inflows. Profits were further lifted by a one-off gain of INR 91bn from the sale of its non-banking financial services arm. A more supportive regulatory backdrop may have helped, with India’s central bank cutting reserve requirements during the year.

Figure 18: Xiaomi (HKD)

Source: Bloomberg

Xiaomi

The JAGI team acknowledges that having no exposure to Xiaomi has been unhelpful recently. They comment that Xiaomi has done well to diversify its revenue, often following a model of entering a market with a low-end offering, taking market share, and then improving product quality. They say that Xiaomi did this in the mobile handset market and then repeated the process in home appliances (building a presence in the ‘internet of things’ (IOT).

More recently, Xiaomi has been targeting the electric vehicle (EV) sector. JAGI’s managers are cautious on this move, given the strength of the competition in China (40 car companies are competing for share if you include western firms) and a switch of strategy by entering the market at the premium end.

It has been observed that Xiaomi’s models bear a close resemblance to those of western competitors. Xiaomi’s SU7 closely resembles the Porsche Taycan, for example, and its new YU7 model looks a lot like Ferrari’s SUV.

JAGI’s manager feels that a lot of capital is being dedicated to this area in China, and that Toyota is a potential aggressive competitor. The apparent ease of Xiaomi’s entry to the market might suggest that barriers to entry are low in their view. Nevertheless, the team is keeping a close eye on Xiaomi and other leading players in the sector. There is a feeling that companies in the supply chain may be interesting too. The managers see the potential for overcapacity though, which they highlight is a problem in other parts of Chinese industry.

Others

China Construction Bank is part state-owned. Again, it has had a run of positive share price performance in recent years (up about 30% over the past 12 months). However, the managers are wary that, at times, minority investors’ best interests may not be looked after. The JAGI team does like ICICI Bank, but KMB has been a better investment recently. Pinduoduo was discussed previously.

Performance

As Figure 19 shows, over the last five years JAGI has been able to deliver a NAV return that has exceeded its benchmark, albeit that – on a relative basis – it has retrenched from highs achieved in January 2023.

Figure 19: JAGI NAV total return relative to MSCI AC Asia ex Japan over five years ended 31 July 2025

Source: Morningstar, Marten & Co

Figure 20: Cumulative total returns over periods ending 31 July 2025

Contributors and detractors

The top five absolute contributors and detractors to JAGI performance over the 12 months ending 31 May 2025 are shown in Figure 21. Of the top five contributors, Hong Kong Exchanges & Clearing, Alibaba, and Telstra are covered on pages 7 to 9.

Figure 21: JAGI top contributors and detractors over 12 months ended 31 May 2025

Figure 22: Tencent (HKD)

Source: Bloomberg

Tencent

Tencent (tencent.com), the Chinese technology conglomerate, has delivered positive share price returns over the past year, aided by increased share buybacks and improving earnings (particularly for its gaming division). Tencent gaming revenues increased by 24% YoY in its most recent earnings update (for Q1 2025) and this remains the largest contributor to the firm’s revenue, driven in part by the successful launch of its mobile game Delta Force, which has become one of the world’s most popular mobile games. Tencent has increased its spending on AI, launching an AI chatbot within its WeChat platform. Tencent’s management feels that AI integration can help improve marketing revenues, improving click-through rates, for example.

Figure 23: NetEase (HKD)

Source: Bloomberg

NetEase

NetEase (www.netease.com) is a Chinese software company known for its online and mobile games, though it also offers other services such as e-commerce, advertising, and emails. NetEase’s recent returns reflects the performance of its gaming arm, particularly some of its newer games, like Marvel Rivals and Where Winds Meet, as well as the stronger-than-expected performance from some of its legacy titles. In its most recent earning update (for Q1 2025), NetEase reported a 7% YoY increase in revenues, with its gaming arm reporting a 12% YoY increase in revenues (now making up 83% of total revenue). NetEase also reported improving profitability, up 8.6% YoY, due in part to lower operating expenses, which were down 14.4% YoY. Analysts are expecting the two aforementioned titles to support revenue growth over the year, with two new game releases (Marvel Mystic Mayhem and Destiny Rising) also earmarked as potential sources for further revenue growth.

Figure 24: Reliance Industries (INR)

Source: Bloomberg

Reliance Industries

Reliance Industries (ril.com) is an Indian conglomerate, and the country’s largest employer. Its business ranges from energy, gas, and oil, to media, telecoms, and retail. Reliance Industries shares have been under pressure due to weaker earnings from its commodities arms between its 2023 and 2025 financial years, as well as lower margins from its refining and petrochemical arm. While the company’s consumer businesses, such as its telecoms and retails services, have generated positive earnings growth over FY25 year, it has been insufficient to offset weakness elsewhere in the business. The market had previously reduced its expectations for FY25. However, it would appear that commentators are more bullish on the outlook, for the FY26, with suggestions that margin pressures are behind the company.

Figure 25:Colgate-Palmolive India (INR)

Source: Bloomberg

Colgate-Palmolive India

Colgate-Palmolive India (colgatepalmolive.co.in) is an Indian consumer goods company, primarily making personal care products such as toothpaste and skin care. Colgate-Palmolive’s share price performance reflects the selloff from its October 2024 all-time-high. The catalyst for this appears to be weak Q2 results (for FY25), specifically below-expectations EBIDTA due in part to higher advertising and promotional expenditure. Its management also indicated that near-term demand would remain subdued, something that has been reflected in its subsequent results and share price.

Figure 26: Kanzhun (HKD)

Source: Bloomberg

Kanzhun

Kanzhun (ir.zhipin.com) is a Chinese human resources company that focuses on app-based online recruitment services. Since its IPO in December 2023, Kanzhun’s share price has been quite volatile. As hiring tends to be sensitive to economic activity, Kanzhun’s share price may reflect the general uncertainty around China’s economic outlook over the past 12 months. So far, these potential headwinds may have impacted sentiment rather than operational performance, as Kanzhun reported a 23% increase in revenue over its 2024 financial year and a 43% increase in net income – growth which has continued into the first quarter of 2025.

Peer group

Up to date information on JAGI and its peer group is available on the QuotedData website

There are five trusts within the AIC’s Asia Pacific Income sector. JAGI is the smallest of these, although with a c.£300m market cap although this is still a reasonable size for a trust. JAGI’s discount is close to the sector median.

The new dividend policy (see page 19) may not yet be reflected in Morningstar’s numbers, but JAGI’s dividend yield should be competitive based on the numbers in Figure 27. Two of JAGI’s peers, Aberdeen Asia Income and Henderson Far East Income, will still offer a higher yield, all things bneing equal, but both of these strategies have a stronger bias to value stocks than JAGI (based on data from Morningstar).

JAGI has the lowest ongoing charges ratio of its peer group, despite also being the smallest trust and thus lacking the same scale-advantages of its peers. The trust’s management fee structure appears to be a facto. It is described on page 22.

Figure 27: Asia Pacific Income peer group stats as at 31 July 2025

JAGI’s three and five-year returns are below those of the peer group median. Some peers adopt more concentrated asset allocation bets, but the five-year figures are also distorted by the effects of the COVID-related selloff. This may in part help to explain why JAGI’s track record is more competitive over a three-year time period, which is not affected by this.

Figure 28: Asia Pacific Income peer group NAV total return performance over periods ending 31 July 2025

Dividend

In December 2024, JAGI revised its dividend policy, from approximately 4% of NAV per annum to approximately 6% of NAV per annum. The board intended for this change to reflect an environment of higher interest rates (and hence more competition from cash and bond investments for income investors’ attention).

With effect from its 2025 financial year, JAGI now pays regular quarterly dividends of 1.5% of quarter-end NAV. Any shortfall on the revenue account is made up through distributions of capital.

Following the payment of the fourth quarterly dividend for FY2024, JAGI’s distributable reserves stood at £160.325m.

Figure 29: JAGI five-year dividend record, financial years ended 30 September

Source: JPMorgan Asia Growth and Income

Figure 29 illustrates the increase in dividend income since the policy change. We have included a notional 6.3p dividend for October to give the full-year picture. If we annualise that, the yield on the current share price would be 6.4%.

Premium/(discount)

Over the 12-month period ending 31 July 2025, JAGI’s discount moved within a range of 7.3% to 13.6% and averaged 9.4%. At 31 July 2025, JAGI’s shares were trading on a 9.5% discount to NAV.

Share buybacks are used with the aim of ensuring that JAGI’s shares trade no wider than an 8%–10% discount to NAV. Shareholders have given JAGI’s board the authority to repurchase 14.99% of the issued share capital, and issue up to 10%. These permissions are renewed at each AGM. If, as happened last year, the directors feel that it is necessary, they will convene a meeting to secure additional share buyback permissions.

Over 2020 and 2021, JAGI’s shares traded at a premium. This was a period in which higher growth strategies were generally in greater demand, reflecting the lower interest rate environment that prevailed during the COVID pandemic.

Discounts across the whole investment company sector widened as interest rates rose in 2022 and JAGI was no exception to this.

The discount control mechanism appears to have helped to moderate discount volatility since then.

Figure 30: JAGI premium/(discount) over five years ended 31 July 2025

Source: Morningstar, Marten & Co

Figure 31: JAGI share repurchases by month

Source: JPMorgan Asia Growth and Income

Over the past 12 months the company has repurchased 12.1m shares, equal to 14.8% of the shares in issue.

Structure

Capital structure

At 31 June 2025, JAGI had 97,796,993 ordinary shares in issue of which 28,789,002 were held in treasury. The number of shares with voting rights was 69,007,991.

Gearing

JAGI does not have a conventional borrowing facility. However, it is able to gear by using contracts for difference. As at 30 June 2025, gearing was 4.9%.

Key dates

JAGI’s financial year end is 30 September. Full-year results are announced in December and interims in May. The AGM is held in February.

There is a continuation vote scheduled for the AGM in 2026 and every three years thereafter.

Fees and costs

JAGI charges a flat management fee of 0.60% per annum, based on the average of the preceding three-month end capitalisations. We feel that the use of market capitalisation to calculate management fees rather than NAV is a better outcome for shareholders, as it incentivises JAGI’s manager to help narrow its discount. There is no performance fee.

JAGI’s articles of association stipulate that the aggregate fees incurred by the board’s renumeration must not exceed £250,000 per annum, and any increase in this maximum requires both board and shareholder approval.

For the year ended 30 September 2024, JAGI had an ongoing charges ratio of 0.78%, the same figure reported for the previous 12 months. JAGI’s 2024 ongoing charges ratio reflected management fees of £1.7m, and administration fees of £0.8m.

Management team

Robert Lloyd

Robert Lloyd, managing director, is a portfolio manager for the Asia Pacific Core Strategy and a member of the Japan team within the Emerging Markets and Asia Pacific (EMAP) Equities team. Based in Hong Kong, he joined the firm in Tokyo in 2005 and transferred to Hong Kong in 2009. Prior to this, Robert spent three years with UBS Asset Management in Tokyo as an investment analyst, initially for risk management and latterly for Japanese equities. He began his career as a collateral analyst in the credit group of Deutsche Bank, Tokyo. Robert obtained a B.A. in Literature and Linguistics from the University of Montana, U.S.

Pauline Ng

Pauline Ng, managing director, is a country specialist for ASEAN equities and head of the ASEAN team within the Emerging Markets and Asia Pacific (EMAP) Equities team based in Singapore. Pauline joined the firm in 2005 from AllianzDresdner Asset Management where she was first an Asia ex-Japan telecommunications analyst and latterly as a fund manager responsible for Malaysia and emerging Asia. Pauline obtained a Bachelors degree in Accounting from Nanyang Technological University in Singapore. She is a CFA Charterholder and a Certified Public Accountant.

Board

JAGI has five directors, all of whom are non-executive and independent of the manager.

Diana Choyleva will step down on 4 August 2025 due to the pressure of her other commitments. Peter Moon will retire at the AGM in February 2026, following the completion of his nine-year tenure as a director. Recruitment for their replacements is underway.

Figure 32:    Board member – length of service and shareholdings

Sir Richard Stagg

Richard is a former member of the British Diplomatic Service. His last two roles were ambassador to Afghanistan between 2012 and 2015 and high commissioner to India between 2007 and 2011. Richard’s previous positions included chief operating officer, private secretary to the Foreign Secretary and ambassador to Bulgaria. He also chaired the board of FCO Services between 2007 and 2017 (a government-owned company delivering security services to the UK and foreign governments).

He is currently warden of Winchester College. He is also a non-executive director of Max Financial Services, an Indian listed company; a trustee of the Turquoise Mountain Foundation (which works in Afghanistan, the Middle East and Myanmar). He was previously chairman of Rothschild & Co (India).

Diana Choyleva

Diana is a leading expert on China’s economy and politics and is chief economist and holds the position of a director at Enodo Economics Ltd, an independent macroeconomic and political forecasting company. She is also a non-resident senior fellow on the Chinese economy at the Asia Society Policy Institute’s Center for China Analysis in New York. Previously she worked at Lombard Street Research, most recently as their chief economist and head of research.

Peter Moon

Peter was chief investment officer of the Universities Superannuation Scheme. He is chairman of Bell Potter (UK) Limited and is a director of First Property Plc. He is the former chairman of The Scottish American Investment Company Plc, a former director of MBNA Europe, and a former member of the National Association of Pension Funds Investment Committee.

June Aitken

June is currently the chair of CC Japan Income & Growth Trust Plc, and non-executive director of Schroder Income Growth Fund Plc and BBGI Global Infrastructure SA. She was also previously on the board of HSBC Bank Japan, Aquarius Fund, an Asian fixed income fund, Australian Securities Exchange listed Emerging Markets Masters Fund and the Asian Masters Fund Limited, Erudine Holdings Ltd, a financial software consultancy firm and the Shepherds Bush Housing Group. June was a founding partner and investor of Osmosis Investment Management LLP.

Kathryn Matthews

Kathryn was the chief investment officer for Asia ex Japan equities at Fidelity International. Prior to that she held senior management roles with AXA Investment Managers and Baring Asset Management.

Kathryn has been on the board of a number of investment trusts including Fidelity Asian Values Plc and JPMorgan Chinese and is currently a non-executive director of the Vietnamese Opportunities Fund Plc.

She is also the chairman of Barclays Investment Solutions Ltd and is a non-executive director of British International Investment Ltd.

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