Investment trust JPMorgan American is a £1.3billion fund designed to provide investors with exposure to the US stock market without any big surprises.
It is run from New York by Brits Jonathan Simon and Timothy Parton – longstanding work colleagues at JPMorgan, with more than 75 years of investment experience between them. The fund represents their ‘very best’ stock ideas.
‘We want it to be the vehicle that UK investors, in search of a US fund, are comfortable using,’ says Parton.
The pair have jointly run the stock market-listed trust since June 2019 and have firmly stamped their mark on the portfolio.
The fund’s key performance driver is a concentrated portfolio of 40 large US companies, many of them familiar names to UK investors. Top-ten holdings include Microsoft, Alphabet, Apple and Amazon.
It also has exposure to a sprawling 130-strong portfolio of smaller companies, representing five per cent of the trust’s assets.
These are overseen by colleague Eytan Shapiro. Flexibility, says Parton, is the name of the game. ‘Yes, the biggest holdings are essentially strong, hard-to-beat companies in growth mode,’ he explains. ‘But there’s much more besides to this fund.’
So, apart from its smaller company stakes – in firms such as trucking business Saia and tech firm CyberArk – the trust also has key positions in a number of big companies that are more ‘value’ than ‘growth’ stocks. In other words, they are businesses whose worth is not fully reflected in their share price, but are underpinned by strong cash flows.
Examples include Loews, a company with diverse business interests in everything from insurance and hotels through to packaging. ‘It’s an organisation that generates tons of cash,’ says Parton.
Others include utility company Xcel Energy, forestry group Weyerhaeuser and conglomerate Berkshire Hathaway, whose chief executive is the legendary Warren Buffett – a passionate believer in value investing. ‘Jonathan goes to the company’s annual general meeting every year,’ says Parton. ‘He’s a believer.’
The managers are not afraid to jettison stocks if they feel they are overvalued. A stake in electric car manufacturer Tesla was disposed of because of fears that the shares were looking overpriced. ‘We might come back to it at some stage,’ says Parton. ‘We still love the business.’ Stakes in Marathon Petroleum and Raytheon Technologies were also recently unwound on environmental, social and governance (ESG) grounds.
The trust’s performance numbers are good. Over the past one, three and five years, it has outperformed its peers with returns of 35, 53 and 121 per cent. It has also beaten its benchmark, the S&P500 Index.
Yet Parton says there is no room for complacency. He adds: ‘Every other Wednesday, we sit down together and for hours go through the portfolio asking one simple question, ‘Are we happy with each of the individual stocks we are holding? Should we sell or keep them?’ It’s a discipline that seems to work well. Although we’re true believers in what we are doing as fund managers, we never stop worrying.’
The trust pays a dividend twice a year, but it is minimal. In the past year, it totalled 6.75p a share – this compares with a current share price of £6.78. One attractive feature of the trust is its charges, which equate to a competitive 0.34 per cent per year.
The stock market identification code is BKZGVH6 and the ticker is JAM.