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FOR INSTITUTIONAL USE ONLY | NOT FOR PUBLIC DISTRIBUTION
JPMorgan Mid Cap Investment Trust plc Annual General Meeting 2nd November 2015
Georgina Brittain, Portfolio Manager
Katen Patel, Assistant Portfolio Manager
1 | FOR INSTITUTIONAL USE ONLY | NOT FOR PUBLIC DISTRIBUTION
Agenda
Introduction
Performance Review
Current Portfolio
Current Performance
Key Themes
Outlook
Conclusion
2 | FOR INSTITUTIONAL USE ONLY | NOT FOR PUBLIC DISTRIBUTION
JPMorgan Mid Cap Investment Trust plc Key features
Investment objective – Capital growth from medium-sized companies in the UK
Investment policies – To specialise in FTSE 250 companies
– Use long and short-term borrowing to increase returns
Benchmark – FTSE 250 index (ex Investment Trusts)
Yield – Current yield 2.5%
Investment guidelines
Stock actives +/- 5%
Sector actives No constraints
Non-index holdings Max 15%
Gearing 95-125%
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JPMorgan Mid Cap Investment Trust plc
Source: J.P. Morgan Asset Management and Morningstar. All figures are on a total return basis. Annual Report & Accounts 24 September 2015.
Key contributors to returns for year ended 30 June 2015
4 | FOR INSTITUTIONAL USE ONLY | NOT FOR PUBLIC DISTRIBUTION
Financial year performance to 30 June 2015
Source: Datastream. Data as at 30 June 2015 rebased to 100 as at 30 June 2014, in GBP, NAV return is total return.
JPMorgan Mid Cap Investment Trust plc - 1 July 2014 to 30 June 2015
90
95
100
105
110
115
120
125
130
135
Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15
Mid Cap Inv Trust NAV
Mid Cap Inv Trust share price
FTSE 250 ex ITS
NAV 24.7%
Share Price 24.0%
FTSE 250 15.0%
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Three year performance to 30 June 2015 JPMorgan Mid Cap Investment Trust plc - 30 June 2012 to 30 June 2015
70
90
110
130
150
170
190
210
230
250
270
Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15
Mid Cap Inv Trust return to shareholders
Mid Cap Inv Trust NAV
FTSE 250 ex ITs
146%
79%
125%
Cumulative returns
Source: Source: J.P. Morgan Asset Management. Thomson Reuters Datastream. Data as at 30 June 2015 rebased to 100 as at 30 June 2015, in GBP, NAV return is total return.
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Stock level attribution
Performance attribution
Source: FactSet. The above portfolio characteristics are shown for illustrative purposes only and are subject to change without notice. The Fund is an actively managed portfolio, holdings, sector weights, allocations and leverage, as applicable are subject to change at the discretion of the Investment Manager without notice.
Major stock contributors to returns – 12 months to 30 June 2015
-1.0% -0.5% 0.0% 0.5% 1.0% 1.5%
Bank Of Georgia (o)Man Group (u)
Afren (o)Thomas Cook (o)
Soco International (o)Greggs (o)
Card Factory (o)Premier Oil (u)
CSR (o)Drax (u)
Serco (u)Amec Foster Wheeler (u)
Ashtead Group (o)Micro Focus International (o)
Howden Joinery (o)
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Stock positions
Source: FactSet. The above portfolio characteristics are shown for illustrative purposes only and are subject to change without notice. The Fund is an actively managed portfolio, holdings, sector weights, allocations and leverage, as applicable are subject to change at the discretion of the Investment Manager without notice.
Top 10 stock overweight positions as at 30 September 2015
Stock Active weight (%) Ashtead Group 4.2
Howden Joinery 3.9
Berkeley 2.9
Micro Focus International 2.9
Bellway 2.7
Onesavings Bank 2.2
Card Factory 2.1
JD Sports Fashion 2.0
Betfair 2.0
Provident Financial 1.9
… top 10 represent 32.8 % of the portfolio
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Portfolio positioning
Source: FactSet. The above portfolio characteristics are shown for illustrative purposes only and are subject to change without notice. The Fund is an actively managed portfolio, holdings, sector weights, allocations and leverage, as applicable are subject to change at the discretion of the Investment Manager without notice.
JPM Mid Cap Investment Trust plc - as at 30 September 2015
-8.0% -4.0% 0.0% 4.0% 8.0%
Industrial Engineering
Aerospace & Defence
Oil Equip., Serv. & Distn.
Nonlife Insurance
Oil & Gas Producers
Banks
Financial Services
General Retailers
Support Services
H'h' Goods & Home Construct.
Top / bottom active sector positions
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Performance since the year end
Source: Datastream. Data as at 30 September 2015, rebased to 100 as at 30 June 2015, in GBP, NAV return is total return.
JPMorgan Mid Cap Investment Trust plc - 30 June 2015 to 30 September 2015
90
95
100
105
110
115
Jun-15 Jul-15 Aug-15 Sep-15
Mid Cap Inv Trust NAV
Mid Cap Inv Trust share price
FTSE 250 ex ITS
NAV 0.1%
Share Price 10.8%
FTSE 250 -4%
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Value of completed acquisitions as % of index starting market cap
M&A activity has been a key feature
M&A is typically a Small & Mid cap phenomenon
Historically 3-5% of the index acquired p.a.
Net 70% of CFO’s expecting M&A to increase*
*Source: Liberum as at 31 August 2015
0%1%2%3%4%5%6%7%8%9%
10% FTSE 100 (LHS) FTSE 250 (LHS) Small Cap (LHS)
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0.2
0.3
0.4
100
150
200
250
300
350
400
450
500
Mar-13 Sep-13 Mar-14 Sep-14 Mar-15
Share Price (LHS)
EPSe 1 yr fwd (RHS)
HellermannTyton
Benefitting from both sides…
Cheap funding, surplus cash and a search for growth is driving activity…
Source: Thomson Datastream, J.P. Morgan Asset Management. The companies/securities above shown are 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 have positions on behalf of its clients in any or all of the aforementioned securities.
Leading infrastructure software provider Strong management track record of excellent shareholder returns Significantly enhancing debt-funded acquisition
A world leader in cable management solutions Structural substitution towards plastic for Autos Acquired at a 45% premium by large US peer.
Share price (EUR) EPS (EUR)
Micro Focus International
Share price (GBP) EPS (GBP)
0.60
0.70
0.80
0.90
1.00
1.10
1.20
1.30
1.40
1.50
0
200
400
600
800
1,000
1,200
1,400
1,600
Dec-10 Dec-11 Dec-12 Dec-13 Dec-14
Share Price (LHS)
EPSe 1 yr fwd (RHS)
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Consumer driving UK economic momentum
Consumer confidence at multi-year high
Considerable rise in consumers’ disposable income
Source: Barclays as at July 2015. CCI denotes Consumer Confidence Index. CPI denotes Consumer Price Index.
Gfk consumer confidence index UK average weekly earnings growth (%)
-35
0
2012 2013 2014
CCI
-8
0
8
2007 2011 2015
UK average weekly earnings growth (%, y/y) - monthlyCPI (%)
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UK consumer focus
UK household discretionary spend continues to rise…
Source: Thomson Datastream, J.P. Morgan Asset Management. The companies/securities above shown are 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 have positions on behalf of its clients in any or all of the aforementioned securities.
0.1
0.2
0.3
0
100
200
300
400
500
600
Dec-10 Dec-11 Dec-12 Dec-13 Dec-14
Share Price (LHS)
EPSe 1 yr fwd (RHS)
Howden
Share price (GBP) EPS (GBP)
JD Sports
Share price (GBP) EPS (GBP)
0.2
0.3
0.4
0.5
0.6
4
204
404
604
804
1,004
Dec-10 Dec-11 Dec-12 Dec-13 Dec-14
Share Price (LHS)
EPSe 1 yr fwd (RHS)
Market share gains from DIY sheds Strong returns on investment in store estate Positive cyclical drivers
Leading sports fashion retailer Strong growth driven by web and product innovation Positive cyclical drivers
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Outlook
UK economy remains well positioned
– Monetary policy set in a way that helps to sustain growth and employment
– Stable pro-business government for 5 years
– UK composite PMI close to all time highs
Stock fundamentals are attractive
– Stock valuations reasonable for level of growth
– Balance sheet strength provides attractive income or investment opportunities
– Return of M&A provides support
Continued volatility expected
– Polls still suggest no European exit
– Interest rates likely lower for longer
… well positioned for the future
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Conclusion
A volatile but excellent year for JPMorgan Mid Cap
Strong start to the current financial year
Exciting opportunities remain
… an exciting sector to be invested in
16 | FOR INSTITUTIONAL USE ONLY | NOT FOR PUBLIC DISTRIBUTION
Appendix
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Biography
Source: J.P. Morgan Asset Management. There can be no assurance that the professionals currently employed by J.P. Morgan Asset Management will continue to be employed by J.P. Morgan Asset Management or that the past performance or success of any such professional serves as an indicator of such professional's future performance or success.
… expertise, experience and the backing of a large group
Georgina Brittain Georgina Brittain, Managing Director, is a senior portfolio manager for UK smaller companies within the J.P. Morgan Asset Management European Equity Group. She is the named manager for the JPM Life UK Small Cap Equity Fund, JPMorgan Smaller Companies Investment Trust and for the JPM UK Smaller Companies Fund; She is also joint fund manager on the Pan European small cap funds. An employee since 1995, Georgina was previously an analyst in the UK Research Department. Georgina obtained an M.A. in Classics from Oxford University, and earned a Diploma in Law from City University, London. She is a qualified barrister.
Katen Patel Katen Patel, Vice president, is a portfolio manager in the Europe Small/Mid Cap Team within the J.P. Morgan Asset Management European Equity Group. He is the co-manager of the UK Smaller Companies Fund, the JPMorgan Smaller Companies Investment Trust and the JPMorgan Mid Cap Investment Trust. An employee since April 2013, he previously worked at HSBC Bank Plc in a European equity sales role. He obtained a B.Sc. in Management from the London School of Economics. Katen is a CFA charterholder.
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J.P. Morgan Asset Management
This document has been produced for information purposes only and as such the views contained herein are not to be taken as an 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. Both past performance and yield may not be a reliable guide to future performance and you should be aware that the value of securities and any income arising from them may fluctuate in accordance with market conditions. There is no guarantee that any forecast made will come to pass. 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 http://www.jpmorgan.com/pages/privacy. Investment is subject to documentation (Investment Trust Profiles, 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 authorised 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.
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