JPMorgan Claverhouse Investment Trust plc · Data from 31 December 2016 to . at 31 December 2017,...

FOR AGM USE ONLY | NOT FOR FURTHER PUBLIC DISTRIBUTION

JPMorgan Claverhouse Investment Trust plc Annual General Meeting | 25 April 2019

William Meadon, Portfolio Manager

Callum Abbot, Portfolio Manager

1 | FOR AGM USE ONLY | NOT FOR FURTHER PUBLIC DISTRIBUTION

Managers of JPM Claverhouse Investment Trust

Callum Abbot, Vice President An employee since 2012 Manager of Claverhouse since January 2018 7 years industry experience – 7 years at J.P. Morgan Asset Management Qualified CFA

William Meadon, Managing Director An employee since 1996 Head of Behavioural Finance Core Team Manager of Claverhouse since 1st March 2012 36 years industry experience – 23 years at J.P. Morgan Asset Management Qualified ACA

… focused UK equity specialists

As at 31 March 2019.


JPMorgan Claverhouse Investment Trust plc

Founded in 1963, £460million, all cap investment trust– UK only

– 60 – 80 stocks

– Risk-controlled

– Flexible gearing (5% cash to 20% geared) £30m 2020 debenture @ 7.00% pa £50m facility @ 1.87% pa

Since new strategy implemented (1 March 2012) – NAV outperformance vs. benchmark of +1.8% p.a.

– Share price outperformance versus benchmark of +3.5% p.a.

Dividend: 46 consecutive years of dividend growth. Well covered. Best reserves in the sector ( > 1year)*

Past performance is not a reliable indicator of current and future results. Dividends are not guaranteed.Source: J.P. Morgan Asset Management as of 30 March 2019. Annualised net asset value (NAV) return of the investment trust in excess of the benchmark calculated geometrically. NAV return per share is calculated on a bid value to bid value basis, in GBP, cum-income NAV (assuming that all dividends paid out during the relevant periods were reinvested into the shares of the investment trust at the NAV per share on ex-dividend date), with borrowings at par basis. Benchmark = FTSE All –Share Index. Index return does not include fees or operating expenses. *Sector = UK Equity Income Investment Instruments – refer to data provided later in presentation. Image source: Wikimedia, available in the Public Domain Mark 1.0.

https://commons.wikimedia.org/wiki/File:John_Graham_of_Claverhouse_(1648%E2%80%931689),_7th_Laird_of_Claverhouse,_Later_1st_Viscount_of_Dundee,_by_Unknown_Artist.jpg

https://creativecommons.org/publicdomain/mark/1.0/deed.en


85

90

95

100

105

110

Dec 17 Feb 18 Apr 18 Jun 18 Aug 18 Oct 18

-9.5%

2018: a more volatile year

Past performance is not a reliable indicator of current and future results.Source: J.P. Morgan Asset Management, Thomson Reuters Datastream. Data from 31 December 2016 to at 31 December 2017, in GBP. Index return does not include fees or operating expenses. Returns rebased to 100 as of 31 December 2017. Image source Shutterstock.

12 months to 31 December 2018, FTSE All Share Index total return performance

Global market panic


-9.5%

-13.4%

-5.5%

-16%

-12%

-8%

-4%

0%

2018

FTSE All Share Index NAV Total Shareholder return

2018 performance

Benchmark return -9.5%

NAV -13.4%

Total Shareholder Return -5.5%

Dividend +5.8% to 27.5p: 46th consecutive annualdividend increase

Past performance is not a reliable indicator of current and future results. Dividends are not guaranteed.Source: J.P. Morgan Asset Management. Data from 31 December 2017 to 31 December 2018, in GBP. NAV returns are net of fees and applicable charges, income reinvested, borrowings at par (debt valued at maturity face value). Total shareholder return is change in the share price of JPM Claverhouse Investment Trust plc. Benchmark is FTSE All Share Index (total return). Index return does not include fees or operating expenses. The Benchmark is a point of reference against which the performance, risk characteristics or composition of the Investment Trust may be measured. However, the Investment Trust will be managed without reference to its Benchmark.

... a good relative year for Claverhouse shares

2018 performance


Performance in 2018 – attribution

Past performance is not a reliable indicator of current and future results. Source: J.P. Morgan Asset Management, FactSet. The Investment Trust is actively managed according to the Investment Policy and the investment manager’s internal guidelines. Holdings, sector weights, allocations and leverage, as applicable, are subject to change without notice. (o) represents an overweight position relative to the benchmark (FTSE All Share Net Index), (u) represents an underweight position & (n) represents neutral position. Attributions may not match official returns due to differences in systems rounding.

JPM Claverhouse Investment Trust plc – Calendar year ending 31 December 2018

0.5%

0.3%

0.3%

0.3%

0.3%

-0.2%

-0.3%

-0.3%

-0.4%

-0.5%

-0.8% -0.4% 0.0% 0.4% 0.8%

British American Tobacco (u)

Fenner (o)

Fevertree Drinks (o)

John Laing (o)

Softcat (o)

Tesco (o)

AstraZeneca (u)

Smurfit Kappa (o)

Thomas Cook (o)

Jupiter Fund Management (o)

Stock level attribution


UK takeovers continue

Source: J.P. Morgan Asset Management, Bloomberg. Activity from 24 June 2016 to 31 October 2018. The companies above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell.

Merger and acquisition activity is vibrant

948

321224 191 183 164

113 77 48 46 42 33 30 28 24 18 11 10 9 30

200

400

600

800

1000

Uni

ted

Kin

gdom

Ger

man

y

Spa

in

Fran

ce

Italy

Net

herla

nds

Sw

itzer

land

Sw

eden

Den

mar

k

Irela

nd

Por

tuga

l

Nor

way

Luxe

mbo

urg

Bel

gium

Finl

and

Aus

tria

Gre

ece

Jers

ey

Cyp

rus

Isle

of M

an

GBP billions

Top 15 Western European countries by mergers and acquisition activity from 24 June 2016 – 31 October 2018

ShireSky

Fenner


Thomas Cook

Source: J.P. Morgan Asset Management, Bloomberg. Share Price 31 March 2016 to 31 March 2019. The companies/securities above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. Image source: Shutterstock.

Past performance is not a reliable indicator for current and future results.

Thomas Cook share price (£)

0

25

50

75

100

125

150

Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18

Shar

e pr

ice

(£)

Sold

Bought

Investment thesis

A holiday company wrong-footed by the weather! Poor management Balance sheet crisis


Going global – Fever-Tree

Source: J.P. Morgan Asset Management. The securities above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. Image source: Fevertree.


Fever-Tree

Investment thesis

Marketing expertise combined with quality product has driven growth

Vast markets at early stages of growth Stocked in 74 countries


Scotch27%

Vodka11%

Canadian Whisky

7%Rum7%

Liqueurs6%

IMFL Whisky5%

Gin4%

Tequila3%

US Whiskey2%

Beer15%

RTD5%

Other8%

Consistent compounder – Diageo

Source: J.P. Morgan Asset Management, Goldman Sachs. Sales split by category FY18. The securities above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. Image source Shutterstock.


Investment thesis

Diversified growth across spirits, brands and regions Productivity gains supporting margin expansion whilst

investing in brands and innovation Strong free cash generation facilitating £6.9bn of cash

returns to shareholders since FY17

Diageo - sales split by category, FY18


0.25

0.26

0.27

0.28

0.29

0.30

0.31

0.32

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

Apr 17 Oct 17 Apr 18 Oct 18

Share Price (LHS)

Consensus EPSestimate 2019* (RHS)

Strong brand relationships supporting global growth – JD Sports

Source: J.P. Morgan Asset Management, Bloomberg. Data from 28 April 2017 – 23 April 2019. * The consensus EPS estimate is an arithmetic average of selected broker estimates for earnings per share of the company for the year shown. The securities above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. Image source: pxhere under the creative commons licence CC0. The use of the image does not represent an endorsement of JP Morgan Asset Management or any of its affiliates.


Shar

e pr

ice

(£)

Consensus EPS (£) Investment thesis

Consumer demand is for the latest releases from the biggest brands – “The King of Trainers”

Showcasing the brands in the right environment – good for customers, good for brands

Operates in 16 countries in 1474 shops

JD Sports

https://pxhere.com/en/photo/1285154

https://creativecommons.org/publicdomain/zero/1.0/


Stock & sector positions

Source: J.P.Morgan Asset Management, Factset. The Investment Trust is actively managed according to the Investment Policy and the investment manager’s internal guidelines. Holdings, sector weights, allocations and leverage, as applicable, are subject to change without notice.

JPMorgan Claverhouse Investment Trust plc as of 31 March 2019Gearing = 6.9%

Largest overweight and underweight positions (%) Largest overweight and underweight positions (%)

2.3%

1.7%

1.5%

1.5%

1.4%

-1.2%

-1.2%

-1.7%

-1.7%

-1.9%

-4% -2% 0% 2% 4%

Beverages

Oil & Gas Producers

Mining

H'hold Goods & Home Const.

Pharma. & Biotech.

Media

Mobile Telecoms

Gas, Water & Multi-Utilities

Support Services

Aerospace & Defense

1.7%

1.6%

1.5%

1.4%

1.4%

-0.7%

-0.8%

-0.8%

-0.9%

-1.1%

-2% -1% 0% 1% 2%

Diageo

Unilever

Rio Tinto

Legal & General

GlaxoSmithKline

Standard Chartered

National Grid

Reckitt Benckiser

CRH

Vodafone


Handsome returns for shareholders

Past performance is not a reliable indicator of current and future results.Source: J.P. Morgan Asset Management. *Since change of strategy on 1 March 2012. NAV returns are net of fees and applicable charges, in GBP with income reinvested, including actual ongoing charges excluding any entry and exit fees. Total shareholder return is the change in the share price of JPM Claverhouse Investment Trust plc. Benchmark is FTSE All Share Index (total return). Index return does not include fees or operating expenses. The Benchmark is a point of reference against which the performance, risk characteristics or composition of the Investment Trust may be measured.However, the Investment Trust will be managed without reference to its Benchmark. Excess return calculated geometrically. Returns greater than 1 year are annualised.

JPMorgan Claverhouse Investment Trust plc as of 31 March 2019

Annualised performance (% pa)

Three months One year

Three years(% pa)

Five years(% pa)

Since strategy change*(% pa)

NAV returns 11.88 4.45 9.26 6.06 9.63

Share Price returns 8.81 5.06 13.26 7.17 11.50

Benchmark returns 9.39 6.31 9.47 6.08 7.69

NAV excess return +2.27 -1.75 -0.20 -0.02 +1.80

Share price excess return -0.54 -1.18 +3.47 +1.03 +3.54


Share price change versus FTSE All Share Index

Returns to shareholders since change of approach: consistency of returns

Source: J.P. Morgan Asset Management, Bloomberg. Data in GBP. Benchmark Indices do not include fees or operating expenses. Excess returns calculated geometrically. The benchmark is for comparative purposes only, unless otherwise indicated in the Investment Trust’s Investment Objective and Policy. TSR = Total Shareholder Return. TR = Total Return

Past performance is not a reliable indicator of current and future results.

JPMorgan Claverhouse Investment Trust plc1 March 2012 to 31 March 2019

80

100

120

140

160

180

200

220

240

2012 2013 2014 2015 2016 2017 2018 2019

JPM ClaverhouseInvestment Trust

FTSE All-Share

NAV outperformance in > 70% of quarters

Returns Since 1/3/2012 (%)

Claverhouse TSR 113.9% (11.3% p.a.)

FTSE All-Share TR 67.6% (7.6% p.a.)

Claverhouse excess NAV return v FTSE All Share Index

Date Q1 Q2 Q3 Q4

2012 -0.9 0.5 1.3

2013 3.5 2.6 1.4 2.8

2014 1.5 -3.1 1.2 1.4

2015 0.5 0.6 2.0 1.7

2016 -3.7 -2.4 0.4 1.0

2017 1.4 -0.1 1.0 0.4

2018 -0.5 1.7 -0.5 -5.1

2019 2.3


Outlook


A UK fund… what about Brexit ??!

Image source: Shutterstock.


Image source: Shutterstock. Quote source: AZ Quotes

“True wisdom is knowing what you don’t know”

- Confucius

https://www.azquotes.com/quote/469963


Three things you should know about the UK stock market


1. What good value it may be…

Source: Global Financial Data, Datastream, Citi Research. Image source: Shutterstock. Data as at 19 February 2019. UK equities in comparison with 10 year gilts.

Past performance is not a reliable indicator of current and future results.

Only during the First World War have UK equities been cheaper relative to gilts

UK equity dividend yield and bond yield gap (%)

-12

-10

-8

-6

-4

-2

0

2

4

6

8

1914 1924 1934 1944 1954 1964 1974 1984 1994 2004 2014

UK Yield Gap

Current yield gap


United Kingdom28%

Emerging Markets23%

North America23%

Europe ex UK13%

Pacific ex Japan6%

Japan3%

Other4%

2. The UK stock market is not the UK economy

Image source: Shutterstock. Data source J.P. Morgan Asset Management, FTSE All-Share revenue split by geographic region as at 31 March 2010.

Revenue from the FTSE All Share split out by geographic region


IndiaPayout 32%Yield 1.6%

AustraliaPayout 78%Yield 5.3%

EurozonePayout 49%Yield 4.1%United States

Payout 34%Yield 2.2%

CanadaPayout 45%Yield 3.4%

LATAMPayout 53%Yield 4.1%

RussiaPayout 40%Yield 6.9%

HKPayout 47%Yield 3.3%

JapanPayout 31%Yield 2.6%

ChinaPayout 29%Yield 2.7%

S. KoreaPayout 22%Yield 2.3%

MalaysiaPayout 53%Yield 3.3%

S. AfricaPayout 49%Yield 3.3%

SingaporePayout 55%Yield 4.6%

ME/Africa*Payout 42%Yield 3.4%

WorldPayout 40%Yield 2.8%

United KingdomPayout 62%Yield 5.2%

3. It pays some of the best dividends in the world

Image Source: Shutterstock. Data Source: Bloomberg, MSCI (*FTSE) indices at 24 January 2019, Payout=Price /Earnings * Dividend Yield

Past performance is not a reliable indicator of current and future performance.



Source: J.P. Morgan Asset Management, as at 31 December 2018. Dividend growth is calculated as the compounded annual growth rate of dividends paid by JPMorgan Claverhouse Investment Trust plc (excluding special dividends) over the period shown (2008-2018). Not including special dividend of 3.6 pence per share paid in 2008. Dividends paid by the fund may exceed the gains of the fund, resulting in erosion of the capital invested. It may not be possible to maintain dividend payments indefinitely and the value of your investment could ultimately be reduced to zero.

Past performance is not a reliable indicator of current and future results. Dividend declaration and payment is not guaranteed and subject to the dividend policy.

46 consecutive annual dividend increases (1972 dividend = 0.48p)

16.4 16.9 17.5 18.3 18.9 19.5 20.021.5

23.0

26.027.5

0

5

10

15

20

25

30

35

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Total Dividend (pence per share)

+5.3% p.a. +8.3% p.a.

Annual dividend per share


0.95

1.00

1.05

1.10

1.15

1.20

0.00 0.20 0.40 0.60 0.80 1.00 1.20

Claverhouse: A fortress balance sheet

Source: Numis Securities Research, Datastream, Company Data, Bloomberg. Data as of 31 October 2018. Covered and secured dividend refers to attempting to minimize the impact of any falls in capital gains and income from the trust.

Past performance is not a reliable indicator of current and future results. Dividend declaration and payment is not guaranteed and subject to the dividend policy.

JPM Claverhouse IT

Revenue reserves (Years’ dividend)

Div

iden

d co

ver

Peer group

UK Equity Income Investment Companies


The perils of market timing


Impact of being out of the market

GTM – UK | Page 93

Source: Bloomberg, FTSE, J.P. Morgan Asset Management. Investment outcomes based on total return. For illustrative purposes only. Returns calculated daily over the time period assuming no return on each of the specified number of best days. Guide to the Markets - UK. Data as of 31 March 2019.Past performance is not a reliable indicator of current and future results.

5.1%

1.7%

-2.1%

-5.1%

0

5,000

10,000

15,000

20,000

25,000

30,000

Fully invested Missed 10 best days Missed 30 best days Missed 50 best days

Returns of FTSE All-ShareGBP, value of a £10,000 investment from 1999 to 2018 with annualised total return (%)

Initial investment


Alternatively…


You can do nothing, reinvest the income and let compounding do the rest…


If 15 years ago you put £20,000 in an ISA and invested in Claverhouse*…

Image source: Shutterstock. Data source J.P. Morgan Asset Management, as at 31st January 2019. *Claverhouse Investment Trust. University tuition base on the UK maximum amount of £9,250 per year for a 3 year course. Home deposit is total pot net of university fees. For more information see the appendix. Forecasts are not a reliable indicator of future performance.

…you could have put 1 child through university and helped them with a £12,000 first home deposit…

…or put 2 children through university and helped them with a £15,000 first home deposit?

Capital only

Dividends reinvested


Conclusion

Claverhouse continues to provide good performance and a growing annual dividend

After a poor 2018, the UK stock market has rallied strongly in 2019, and still looks good value

Many uncertainties, but most things you worry about are known by others

Volatility is increasing. Don’t market time, enjoy the power of compounding returns

Opinions, estimates, forecasts, projections and statements of financial market trends are based on market conditions at the date of the publication, constitute our judgment and are subject to change without notice. There can be no guarantee they will be met.


John D. Rockefeller


“Do you know the only thing that gives me pleasure?It’s to see my dividends coming in.”

- John D. Rockefeller


Oscar Wilde

Image source: Shutterstock. Quote source: BrainyQuote

“It is better to have permanent income than to be fascinating”

- Oscar Wilde

https://www.brainyquote.com/quotes/oscar_wilde_103666


Appendix


-15%

-10%

-5%

0%

5%

10%

15%

20%

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017 80

100

120

140

160

180

200

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Va

lue

of D

ivid

ends

(Reb

ased

)

UK Market Index

JPM Claverhouse IT plc

Dividends – the advantage of investment trustsWould you like lumpy or consistent?

Source: Bloomberg, Numis Securities Research. Date as of December 2017. Source: Capita, Company Data, Bloomberg, Numis Securities Research. Please note that UK market data excludes the Vodafone special dividend in 2014. As at December 2018.

FTSE All-Share dividend growth by year JPM Claverhouse vs UK Market

Dividends are not guaranteed. Past performance is not a reliable indicator of current and future results.


Six year performance

Past performance is not a reliable indicator of current and future results.Source: J.P. Morgan Asset Management. NAV returns are net of fees and applicable charges, in GBP with income reinvested, including actual ongoing charges excluding any entry and exit fees. Total shareholder return is the change in the share price of JPM Claverhouse Investment Trust plc. Benchmark is FTSE All Share Index (total return). Index return does not include fees or operating expenses. The Benchmark is a point of reference against which the performance, risk characteristics or composition of the Investment Trust may be measured. However, the Investment Trust will be managed without reference to its Benchmark. Excess return calculated geometrically.


Calendar year performance (%)

2013 2014 2015 2016 2017 2018

NAV returns 34.90 2.03 6.04 10.75 16.19 -13.43

Share Price returns 42.94 3.96 3.59 7.22 21.79 -5.47

Benchmark returns 20.81 1.18 0.98 16.74 13.06 -9.51

NAV excess return +11.67 +0.84 +5.01 -5.12 +2.77 -4.33

Share price excess return +18.32 +2.75 +2.59 -8.15 +7.72 +4.46


Share price discount/premium – 3 years

Past performance is not a reliable indicator of current and future results.Source: J. P. Morgan Asset Management. Bloomberg. Data from 31 March 2016 to 31 March 2019.


Net Asset Value (NAV) vs. Share Price

Premium/Discount to NAV

-15

-10

-5

0

5

Mar '16 Sep '16 Mar '17 Sep '17 Mar '18 Sep '18

500

600

700

800

900

Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18

Net Asset Value Last Price


Investment objective and risk profile

Please refer to the Investor Disclosure Document, latest annual report, and Key Information Document (KID) for more information relating to the Company.

JPMorgan Claverhouse Investment Trust plc (the Company)

Risk profile

The value of your investment may fall as well as rise and you may get back less than you originally invested. Where permitted, a trust may invest in other investment trusts that utilise gearing (borrowing), which will exaggerate market movements both up and down. Dividend income payments are not guaranteed and may fluctuate. This fund may use derivatives for investment purposes or for efficient portfolio Management. Derivatives are complex and trusts that use them for investment

purposes may be more volatile. These trusts are considered to be higher risk than trusts that invest only in shares. External factors may cause an entire asset class to decline in value. Prices and values of all shares or all bonds could decline at the same time, or fluctuate in

response to the performance of individual companies and general market conditions. This trust may utilise gearing (borrowing) which will exaggerate market movements both up and down. The trust may invest in smaller company shares, which can be more unpredictable and less liquid than shares of larger companies. The share price may trade at a discount to the Net Asset Value of the company. The single market in which the Trust primarily invests, in this case the UK, may be subject to particular political and economic risks and, as a result, the trust

may be more volatile than more broadly diversified trusts. The key risks facing the Company and the mechanisms in place to monitor and measure these risks are set out in the Company’s annual report, a copy of

which is available from its website, www.jpmclaverhouse.co.uk.

Investment objectiveThe Company aims to provide a combination of capital and income growth from a portfolio consisting mostly of companies listed on the London Stock Exchange. The Company’s portfolio consists of between 60 and 80 individual equities in which the Manager has high conviction. The company has the ability to use borrowing to gear the portfolio within the range of 5% net cash to 20% geared in normal market conditions.


Important information

This is a marketing communication and as such the views contained herein do not form part of an offer, nor are they to be taken as advice or a 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. Past performance and yield are not reliable indicators 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. To the extent permitted by applicable law, we may record telephone calls and monitor electronic communications to comply with our legal and regulatory obligations and internal policies. Personal data will be collected, stored and processed by J.P. Morgan Asset Management in accordance with our EMEA Privacy Policy www.jpmorgan.com/emea-privacy-policy. Investment is subject to documentation. The Investor Disclosure Document, Key Features and Terms and Conditions and Key Information Document can be obtained free of charge from JPMorgan Funds Limited or www.jpmam.co.uk/investmenttrust.

This communication is issued by JPMorgan Asset Management (UK) Limited, which is authorised and regulated in the UK by the Financial Conduct Authority. Registered in England No: 01161446. Registered address: 25 Bank Street, Canary Wharf, London E14 5JP.

Material ID: 0903c02a8257fbdf

JPMorgan Claverhouse Investment Trust plc · Data from 31 December 2016 to . at 31 December 2017,...

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Transcript of JPMorgan Claverhouse Investment Trust plc · Data from 31 December 2016 to . at 31 December 2017,...