DIY Investor Magazine
|
Oct 2017
11
now that just 10 of the hundred shares in the British blue
chip index are forecast to produce 58% of the dividends
paid by FTSE 100 companies this year (5).
Dividends can be cut or cancelled without notice and
so it may make sense for income-seekers to diversify
internationally and broaden the base from which they
hope to obtain yields. For example, JPMorgan European
Investment Trust plc - Income Shares’ underlying
holdings include the Spanish financial services group,
Banco Santander; German chemicals giant, BASF and
French pharmaceuticals group, Sanofi.
SEEKING BIG GAINS FROM SMALLER COMPANIES
Investors whose priority is capital growth and are willing
to accept higher risks in pursuit of potentially higher
returns could consider JPMorgan European Smaller
Companies Trust plc (2), where the fund manager,
Francesco Conte, has been at the helm for 27 years.
This fund delivered total returns to shareholders of 31%
last year and 225% over the last five. However, anyone
considering investment in smaller companies should
remember that not every acorn turns into an oak. As
mentioned at outset, diversification can diminish the risk
INVESTING BEFORE, DURING AND AFTER BREXIT
Britain’s vote to leave the EU has increased uncertainty
at a macro-economic or ‘big picture’ level but
investment trusts focused at home and overseas
continue to provide tried-tested ways to diminish the
risks inherent in stock markets by reducing individual
investors’ exposure to the danger of disappointment in
any one company or country.
However Brexit unfolds, Continental Europe is likely
to continue to be one of the largest trading areas in
the world and home to companies that lead several
industrial sectors. Investors do not need to regard
Britain or Continental Europe as an either/or choice; it is
possible to combine both in an internationally-diversified
portfolio. So it may make sense to hope for the best
from Brexit while preparing for other potential outcomes.
Investors should remember that share prices can fall
without warning and that you may get back less than
you invest. However, investment trusts seek to diminish
the risk inherent in stock markets by diversification and
professional fund management.
There are hundreds of investment trusts to choose from.
For more details see the Association of Investment
Companies. Quarterly rolling 12 months returns to
Shareholders for the past 5 years (%):
•
JPMorgan European Investment Trust plc -
Growth Shares - July 2012/June 2013: 32.1;
July 2013/June 2014: 27.4 July 2014/June
2015: 6.5, July 2015/June 2016 -3.0
•
JPMorgan European Investment Trust plc -
Income Shares - July 2012/June 2013: 28.6;
July 2013/June 2014: 36.4, July 2014/June
2015: 7.2, July 2015/June 2016 -5.0
•
JPMorgan Mid Cap Investment Trust plc -
July 2012/June 2013: 61.2; July 2013/June
2014: 23.2, July 2014/June 2015: 24, July
2015/June 2016 -3.3
•
The Mercantile Investment Trust- July 2012/
June 2013: 34.9; July 2013/June 2014: 20.4,
July 2014/June 2015: 18.1, July 2015/June
2016 -9.3
•
JPMorgan European Smaller Companies
Trust plc - July 2012/June 2013: 37.8; July
2013/June 2014: 39.1, July 2014/June 2015:
7.8, July 2015/June 2016 10.5
1:
Source: European Commission as at 02 October 2014
2:
Source: J.P. Morgan as at 03 October 2017.
Total return to the investor, on a last traded price to last traded price basis,
assuming that all dividends received were reinvested, without transaction costs,
into the shares of the Company at the time the shares were quoted ex-dividend.
3:
Source: BBC as at 1 September 2017
4:
Source: Trustnet as at 03 October 2017
5
Source: AJ Bell as at 12 September 2017
Important information Diversification does not guarantee investment returns and does not eliminate the risk of loss. The companies/
securities above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell.
J.P. Morgan Asset Management may or may not hold positions on behalf of its clients in any or all of the aforementioned securities. Past
performance is not necessarily a reliable indicator of current and future performance. Investment trusts may borrow to finance further
investment (gearing). The use of gearing will increase the volatility of movements in the Net Asset Value (NAV) per share. This means
that a relatively small change, down or up, in the value of a trust’s assets will result in a magnified fall or rise, in the same direction, of the
investment trust’s NAV per share.
This is a promotional document and as such the views contained herein are not to be taken as advice or recommendation to buy or sell
any investment or interest thereto. Reliance upon information in this material is at the sole discretion of the reader. Any research in this
document has been obtained and may have been acted upon by J.P. Morgan Asset Management for its own purpose. The results of such
research are being made available as additional information and do not necessarily reflect the views of J.P. Morgan Asset Management.
Any forecasts, figures, opinions, statements of financial market trends or investment techniques and strategies expressed are unless
otherwise stated, J.P. Morgan Asset Management’s own at the date of this document. They are considered to be reliable at the time of
writing, may not necessarily be all-inclusive and are not guaranteed as to accuracy. They may be subject to change without reference or
notification to you.
It should be noted that the value of investments and the income from them may fluctuate in accordance with market conditions and
taxation agreements and investors may not get back the full amount invested. Changes in exchange rates may have an adverse effect
on the value, price or income of the products or underlying overseas investments. Both past performance and yield are not a reliable
indicator of current and future results. There is no guarantee that any forecast made will come to pass. Furthermore, whilst it is the
intention to achieve the investment objective of the investment products, there can be no assurance that those objectives will be met.
J.P. Morgan Asset Management is the brand name for the asset management business of JPMorgan Chase & Co and its affiliates
worldwide. You should note that if you contact J.P. Morgan Asset Management by telephone those lines may be recorded and monitored
for legal, security and training purposes. You should also take note that information and data from communications with you will be
collected, stored and processed by J.P. Morgan Asset Management in accordance with the EMEA Privacy Policy which can be accessed
through the following website
. Investment is subject to documentation (Investor Disclosure Document,
Key Features and Terms and Conditions), copies of which can be obtained free of charge from JPMorgan Asset Management Marketing
Limited. Issued by JPMorgan Asset Management Marketing Limited which is authorized and regulated in the UK by the Financial
Conduct Authority. Registered in England No: 288553. Registered address: 25 Bank St, Canary Wharf, London E14 5JP. ebd18ab0-
a839-11e7-9842-005056960c8a
