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JPMorgan European Investment Trust plc AGM Alexander Fitzalan Howard July 2015
Growth shares
Income shares
JPMorgan European Investment Trust plc
Source: JPMorgan Asset Management as at 15 July 2015.The targets and aims provided above are the Investment Managers’ targets and aims only and are not necessarily part of the Fund’s investment objectives and policies as stated in the prospectus. There is no guarantee that these will be achieved.
Targets higher yielding Continental European equities with the potential for long term capital growth
Focuses on the highest yielding 30% of the market but only where we believe the dividend is sustainable.
Targets long term capital growth from Continental European equities
Invests in companies that have one or more of these characteristics:
• Attractive value
• High quality
• Positive momentum
JPMorgan European Investment Trust plc
Agenda
1) Performance and attribution
2) Current positioning
3) Outlook
4) Conclusion
JPMorgan European Investment Trust - Growth shares
Source: J.P. Morgan Asset Management, Thomson Reuters Datastream. Returns as at 31 March 2014, in GBP, relative returns calculated geometrically. NAV returns are net of fees and applicable charges, income reinvested, debt at par value. Indices do not include fees or operating expenses and are not available for actual investment. Past performance is not an indication of future performance.
2014/15 2013/14 2012/13 2011/12 2010/11
Total Shareholder Return (%) +14.5 +24.1 +22.7 -11.1 +8.1
NAV Return (%) +7.9 +23.1 +20.0 -13.6 +10.4
MSCI Europe ex UK (Net) (%) +7.0 +17.0 +16.6 -12.1 +6.9
NAV Relative Return (%) +0.8 +5.2 +2.9 -1.5 +3.3
5 year annual performance to 31 March 2015
JPMorgan European Investment Trust - Growth shares Performance to 31 March 2015
Annualised excess returns versus MSCI Europe ex UK Index
0.8%
2.9%
2.0%
7.1%
6.1%
4.1%
0.0%
2.5%
5.0%
7.5%
1 year 3 years 5 years
NAV
Share price
Fund NAV % (net of fees) 7.9 16.7 8.6
Share price % (mid) 14.5 20.4 10.9
Benchmark % 7.0 13.4 6.5
Source: J.P. Morgan Asset Management. Returns as at 31 March 2015, in GBP. NAV returns are net of fees and applicable charges, income reinvested, relative returns calculated geometrically. Benchmark indices do not include fees or operating expenses and are not available for actual investment. Past performance is not an indication of future performance.
Key sectors Key stock contributors
ENI (u), Statoil (u)
Kuka (o), Durr (o)
Pandora (o), Forbo (o)
Banco Santander (u), ING (o)
Prosiebensat.1 Media Ag (o)
Key stock detractors
Ascom (o), Nokia (u)
Zurich Insurance (u), Ageas (o)
Gas Natural (o)
JPMorgan European Smaller Companies Trust (o)
Deutsche Telekom (u), TDC (o), Tele2 (o), Orange (o)
JPMorgan European Investment Trust - Growth shares
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. The companies above are shown 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 hold positions on behalf of its clients in any or all of the aforementioned securities
Major stock and sector contributors to returns- 12 months to 31 March 2015
-1.0% -0.5% 0.0% 0.5% 1.0%
Telecom. Services (u)
Diversified Financials (o)
Utilities (o)
Insurance (o)
Tech. Hardware & Equip. (u)
Media (o)
Banks (o)
Consumer Durables (u)
Capital Goods (u)
Energy (u)
Stock selection
Asset allocation
JPMorgan European Investment Trust - Income shares
Source: J.P. Morgan Asset Management, Thomson Reuters Datastream. Returns as at 31 March 2015, in GBP, relative returns calculated geometrically. NAV returns are net of fees and applicable charges, income reinvested, debt at par value. Indices do not include fees or operating expenses and are not available for actual investment. Past performance is not an indication of future performance.
2014/15 2013/14 2012/13 2011/12 2010/11
Total Shareholder Return (%) +15.4 +28.8 +21.2 -6.3 +7.7
NAV Return (%) +10.7 +26.8 +19.1 -7.4 +7.6
MSCI Europe ex UK (Net) (%) +7.0 +17.0 +16.6 -7.2 +6.6
NAV Relative Return (%) +3.6 +8.4 +2.1 -0.0 +1.0
5 year annual performance to 31 March 2015
Performance to 31 March 2015
Annualised excess returns versus MSCI Europe ex UK Index
3.5%
5.1%
3.1%
7.8% 7.4%
4.8%
0.0%
2.5%
5.0%
7.5%
10.0%
1 year 3 years (p.a.) 5 years (p.a.)
NAV Share price
Fund NAV % (net of fees) 10.7 19.0 10.8
Share Price % (mid) 15.4 21.7 12.7
Benchmark % 7.0 13.3 7.5
JPMorgan European Investment Trust - Income shares
Source: J.P. Morgan Asset Management. Returns as at 31 March 2015, in GBP. NAV returns are net of fees and applicable charges, income reinvested, relative returns calculated geometrically. Benchmark indices do not include fees or operating expenses and are not available for actual investment. Benchmark prior to 27 March 2013 was MSCI Europe Net Index (Total Return). Past performance is not an indication of future performance.
Key sectors Key stock contributors
Santander (u), Unicredit (u)
Burkhalter (o), ABB (u), Compagnie De Saint-Gobain (u)
Hemfosa Fastigheter (o), LEG Immobilien (o), Klovern (o)
Pandora (o), Swatch (u)
Arcelormittal (u), Yara International (o)
Key stock detractors
L‘Oreal (u)
Fiat Chrysler Automobiles (u), Volkswagen (u)
EDF (o), E.On (o), A2A (o), Iren (o)
Anheuser-Busch Inbev (u), Nestle (u)
Bayer (u), Novo Nordisk (u)
JPMorgan European Investment Trust - Income shares
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. The companies above are shown 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 hold positions on behalf of its clients in any or all of the aforementioned securities
Major stock and sector contributors to returns- 12 months to 31 March 2015
-1.0% -0.5% 0.0% 0.5% 1.0% 1.5%
Pharma. & Biotech. (u)
Food, Bev. & Tobacco (u)
Utilities (o)
Autos. & Components (u)
Household & Personal Products (u)
Materials (u)
Consumer Durables (u)
Real Estate (o)
Capital Goods (u)
Banks (u)
Stock selection
Asset allocation
Agenda
1) Performance and attribution
2) Current positioning
3) Outlook
4) Conclusion
Portfolio characteristics
Benchmark: MSCI Europe ex UK Number of holdings: 129 Fund AUM £237m Typical tracking error: 4% p.a
Management team
Part of a team of 47 European equity investment professionals 14 years average experience
Company highlights
JPMorgan European Investment Trust - Growth shares
The targets and aims provided above are the Investment Managers’ targets and aims only and are not necessarily part of the Fund’s investment objectives and policies as stated in the prospectus. There is no guarantee that these will be achieved. Fund size as at 31 March 2015, yield, gearing and discount as at 08 April 2015. *Yield is Trust Growth share class yield (net). ** For further information, including information on Trust fees and charges please visit our website at www.jpmeuropean.co.uk. 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.
Fund overview
Alexander Fitzalan Howard Portfolio Manager
Stephen Macklow-Smith Portfolio Manager
Objective: long term capital growth
Targets: stocks with attractive value, higher quality and better momentum
Conversion between share classes (income & growth): • 15th March
Yield*: 2.6%
Discount: • Current 4.9%
Gearing: • Range: 90-120% • Actual: 104%
Ongoing charges apply**
JPMorgan European Investment Trust - Growth shares
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.
Portfolio positioning - as at 31 March 2015
-2.0% 0.0% 2.0%
Energy
Food Beverage & Tobacco
Health Care Equip. & Serv.
Capital Goods
H'hold & Personal Products
Banks
Autos & Components
Telecoms Services
Pharma Biotech & Life Sciences
Media
Top / bottom active sector positions Top / bottom active country positions
-4.0% -2.0% 0.0% 2.0% 4.0%
Switzerland
France
Spain
Norway
Sweden
Ireland
Belgium
Denmark
Netherlands
Germany
Portfolio characteristics
Benchmark: MSCI Europe ex UK Number of holdings: 239 Fund AUM £121 m Typical tracking error: 4% p.a
Management team
Part of a team of 47 European equity investment professionals 14 years average experience
Company highlights
JPMorgan European Investment Trust - Income shares
The targets and aims provided above are the Investment Managers’ targets and aims only and are not necessarily part of the Fund’s investment objectives and policies as stated in the prospectus. There is no guarantee that these will be achieved. Fund size as at 31 March 2015, yield, gearing and discount as at 08 April 2015. *Yield is Trust Income share class yield (net). ** For further information, including information on Trust fees and charges please visit our website at www.jpmeuropean.co.uk. 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.
Fund overview
Alexander Fitzalan Howard Portfolio Manager
Stephen Macklow-Smith Portfolio Manager
Objective: growing income together with long term capital growth
Targets: higher yielding stocks with sustainable dividends
Conversion between share classes (income & growth):
• 15th March
Yield*: 3.3%
Dividend payments:
• Quarterly
Discount: Current 2.7%
Gearing:
• Range: 90-120%
• Actual: 107%
Michael Barakos CIO & Portfolio
Manager
JPMorgan European Investment Trust - Income shares
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.
Portfolio positioning - as at 31 March 2015
-10.0% -5.0% 0.0% 5.0% 10.0%
Pharma. & Biotech.
Materials
Food, Bev. & Tobacco
Autos. & Components
Capital Goods
Banks
Telecom. Services
Utilities
Insurance
Real Estate
Top / bottom active sector positions Top / bottom active country positions
-10.0% -5.0% 0.0% 5.0% 10.0%
Germany
Switzerland
France
Denmark
Netherlands
Portugal
Italy
Sweden
Finland
Norway
Agenda
1) Performance and attribution
2) Current positioning
3) Outlook
4) Conclusion
Source: (Left hand chart) Bloomberg, FactSet, J.P. Morgan Asset Management. As at 03 July 2015. (Right hand chart) Bloomberg, J.P. Morgan Asset Management. As at 03 July 2013. Past performance is not an indication of future performance. The opinions and views expressed here are those held by the author at the date of publication which are subject to change and are not to be taken as or construed as investment advice
European Sovereign 10 year spreads (versus Germany)
-0.5
0.0
0.5
1.0
1.5
2.0
Jul-1
3
Sep
-13
Nov
-13
Jan-
14
Mar
-14
May
-14
Jul-1
4
Sep
-14
Nov
-14
Jan-
15
Mar
-15
May
-15
Greece
Eurozone
%
0
2
4
6
8
10
12
14
16
18
20
Apr
-14
May
-14
Jun-
14
Jul-1
4
Aug
-14
Sep
-14
Oct
-14
Nov
-14
Dec
-14
Jan-
15
Feb-
15
Mar
-15
Apr
-15
May
-15
Jun-
15
Jul-1
5
Italy 10Y Spain 10Y
Portugal 10Y Greece 10Y
Damage from Greek standoff is enormous but specific to Greece
Consensus forecasts for 2015 economic growth
%
The impact of reform is real
Source: J.P. Morgan Asset Management, Bloomberg as at 31 March 2015.The opinions and views expressed here are those held by the author at the date of publication which are subject to change and are not to be taken as or construed as investment advice
Quarterly GDP (%)
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
Mar
07
Sep
07
Mar
08
Sep
08
Mar
09
Sep
09
Mar
10
Sep
10
Mar
11
Sep
11
Mar
12
Sep
12
Mar
13
Sep
13
Mar
14
Sep
14
Mar
15
Italy Portugal Spain
Ireland Greece
€110bn bailout for Greece
2nd Greek bailout (€109bn)
€85bn bailout for Ireland
€78bn bailout for Portugal
€100bn bailout for Spain
Italy commences reforms
The rate of change in Europe is accelerating
2011 2015
Evolution between 2011 and 2015 Outlook
Consumers
Increasing tax Rising unemployment Pressure on real income
Unemployment has been declining since June 2013
Real income growth Fiscal consolidation Falling energy cost
Governments
Massive austerity Reforms to improve competitiveness Commitment to Maastricht criteria
No expansion yet
Banks
Asset Quality Review Centralised regulation Recapitalisation
Supply and demand of credit improving
Long term refinancing operations Better outlook due to yield curve
Corporates
Fortress balance sheet Repair debt De-gearing No capex Global growth slowdown
Domestic demand Mergers & Acquisitions Capex to start Euro weakness helps
competitiveness
Oil Euro QE
Source: J.P. Morgan Asset Management. J.P. Morgan Asset Management Marketing The opinions and views expressed here are those held by the author at the date of publication which are subject to change and are not to be taken as or construed as investment advice
European EPS Growth is strong
Source: MSCI, IBES, FactSet Estimates, Morgan Stanley Research. As at 31 March 2015.
Long term earnings growth Sector
-44.0%
-7.8% -3.5%
-0.1%
4.0% 9.8% 10.4%
17.0% 17.1%
28.0%
-60%
-40%
-20%
0%
20%
40%
Ene
rgy
Mat
eria
ls
Con
s St
ap
Util
ities
Hea
lth C
are
Indu
stria
ls
Tele
com
ms IT
Con
s D
isc
Fina
ncia
ls
EPS growth 2015e
Source: UBS, March 31, 2015. Blue line represents trailing 12 month Earnings Per Share (EPS) for US universe, grey line for European universe. Rebased to 100 at 31 December 1987.
0
100
200
300
400
500
600
700
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
US 12m trailing EPS
Europe 12m trailing EPS
The opinions and views expressed here are those held by the author at the date of publication which are subject to change and are not to be taken as or construed as investment advice
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Valuation remains attractive
Source: MSCI, OECD, Morgan Stanley, Data as at July 2015. The opinions and views expressed here are those held by the author at the date of publication which are subject to change and are not to be taken as or construed as investment advice
P/E ratio (X)
MSCI Europe: Shiller Price to Earnings
…..but companies need to deliver on earnings
Agenda
1) Performance and attribution
2) Current positioning
3) Outlook
4) Conclusion
Conclusions
Strong performance last year and over the longer term
Greece is dominating the headlines but little sign of contagion impacting the changes in Europe
Corporate earnings growth is accelerating
Valuations remain attractive
Both portfolios positioned to take advantage of positive trends in continental Europe
JPM European Investment Trust plc
JPMorgan Asset Management as at 15 July 2015. The opinions and views expressed here are those held by the author at the date of publication which are subject to change and are not to be taken as or construed as investment advice. I would also add in performance disclaimer as we are discussing that: Past performance is not necessarily a reliable indicator for future performance.
J.P. Morgan Asset Management
Fund Specific Risks The value of investments and the income from them can go down as well as up and you may not get back the full amount you invested. Changes in exchange rates may have an adverse effect on the value, price or income of the product(s) or underlying overseas investments. Both past performance and yield may not be a reliable guide to future performance. 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 product(s), there can be no assurance that those objectives will be met. Please also be aware that investment trusts may use gearing techniques (borrowing) which will exaggerate market movements both down and up which could mean sudden and large falls in market value. Some or all of the Manager’s annual charge for the Fund is taken from capital and/or income. Whilst this increases yield, it reduces the potential for capital growth. Important Information This promotional presentation is for information and educational 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 result 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 product(s) or underlying overseas investments. Both past performance and yield may not be a reliable guide to future performance. 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 product(s), 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. 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.