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01 Mar 2022

JPMorgan European Growth & Income

Company Notes

Discount offers value following combination

JPMorgan European Growth & Income* has recently been restructured, including the consolidation of its two share classes, Income and Growth, into a single ordinary share class. The restructure fund is managed in accordance with the investment policy that was previously applicable to the Growth share class. The aim is to provide a core portfolio of European equities through a blended investment approach. In addition, the fund has adopted an enhanced dividend policy targeting an annual dividend equivalent to 4% of its preceding financial year-end NAV. This is likely to require a proportion of the dividend paid from capital profits and the managers estimated that the portfolio yield is currently 3.2%. The Board has also introduced other measures to alleviate discount risk, namely a buyback commitment to keep the discount to single digits in normal market conditions and a one-off performance-related tender for up to 25% of share capital if the NAV total return lags the benchmark over the five years from 4 February 2022.

The fund’s long-term performance record can be considered through the track record of its historical Growth share class. Over the last ten years, the investment strategy has outperformed, generating a NAV total return of +168% compared with +154% for its benchmark, the MSCI Europe ex UK Index. In share price terms, it is even stronger, with a return of +172% reflecting the fund’s re-rating over the period.

*Denotes a corporate broking client of Winterflood Securities