Ten years ago, the directors of JPMorgan Global Growth & Income (LSE: JGGI) – then called the JPMorgan Overseas Investment Trust – adopted a new strategy to address the fund's persistent discount to net asset value (NAV). The trust would invest globally without regard to income but pay an annual dividend of at least 4% of net assets. The idea was to give investors an attractive income via an approach that wasn't held back by the hunt for yield.
The renamed fund was an instant success. Performance improved, and the discount to NAV disappeared. The trust grew – by absorbing two other trusts in 2021 and 2025 and by issuing new shares for cash – and achieved greater economies of scale. Today, JPMorgan Global Growth & Income has £3.4 billion of assets – up from £200 million a decade ago – and operating costs of just 0.42%.
JPMorgan Global Growth & Income's spell of weak returns
However, the shares returned to a discount amid the wider market setback for investment trusts in 2022 and the directors had to start buying back shares again. The discount shrank, but in August 2024, performance began to flag. A NAV return of 16.7% over one year and 50.9% over three lags the benchmark (the MSCI AC World index) by 11% and 13.4% respectively. However, manager James Cook points out that it is still nearly 2% per year (net of fees) ahead since the change of strategy.
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“We have seen many similar drawdowns over the last 30 years for our style,” he says. “On average, they last a year and cost performance 9%.” The latest one has lasted longer and cost more, which reflects market trends. “It has been a market strongly based on momentum rather than on the long-term valuations and earnings growth, but a return to normal will be very good for fundamental investors, as it has been after previous such phases.”
Cook and his team look for firms with high-quality earnings that are growing 2% faster than average but valued similarly to the market based on free cash flow. “Less than 3% out of 2,500 stocks in the investment universe offer all three.”
Manager James Cook backs AI winners
Cook has been reducing exposure to “low growth cyclicals” and buying AI-related semiconductor stocks such as Nvidia, which is 6.3% of the portfolio. “It is back at a trough-level multiple, yet the AI market keeps accelerating, and its newest Rubin chip is five times more powerful than the Blackwell chip.”
AI “is bigger than the internet in 2000, with long duration growth. Semi-conductor manufacturers are booked out for years.” Hence TSMC is also in the top five holdings. “It is really attractive on valuation while producing over 90% of the world's leading-edge chips.”
Overall, the technology sector makes up 25% of the portfolio (excluding Alphabet and Amazon, which are classified elsewhere). Cook has also been buying payments network Mastercard – “widely regarded as an AI loser but the fraud detection and identity verification services it provides are increasingly important”.
Insurer Tokyo Marine was added for its “strong earnings growth” shortly before Berkshire Hathaway acquired a stake and pushed the share price up 30%. Vesta, a provider of assisted living in the US, is “the beneficiary of demographic change in a market with a structural supply shortage”. Oil major Shell has been bought on “a really attractive valuation”.
Few of these are high-yielding. Sizeable positions in Alphabet, Amazon, Apple, Microsoft, Nvidia and TSMC would be impossible if the 4% yield were paid solely from income, showing the flexibility of this strategy. Most of JPMorgan's other trusts and some other firms have followed JPMorgan Global Growth & Income's lead in paying an enhanced dividend out of capital, reducing its competitive advantage. But for yield-hungry investors unwilling to sacrifice capital returns for extra income, it is attractive, while Cook's case for the period of dull returns being near the end is compelling.
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