JPMorgan Global Growth & Income (JGGI) has announced its annual results for the year ended June 30, 2024. During the period, JGGI provided NAV and share price total returns of 28.0% and 28.8%, respectively, compared to 20.1% Total return for his scalethe MSCI AC World index (all in pounds sterling). JGGI says excess returns were generated across three major style rotations across markets and sectors, while both U.S. and international companies contributed to returns. JGGI intends to pay the full amount dividend of 22.8 pence per share for the year ended June 30, 2025, an increase of 23.6% year-on-year. JGGI regularly issued 65 million shares during the year, raising £342 million, while a placement and retail offer raised a further £35 million. It is said that a Brochure is expected to be published in October and will allow for the issuance of up to 150 million shares over the term of the placement program.

JGGI chairman Tristan Hillgarth says investor sentiment was largely positive over the period, with the market supported by continued excitement around artificial intelligence, while there were signs of a decline inflation The pressure was met with relief, especially since it was not accompanied by an obvious slowdown in economic growth. He adds that lower inflation has created scope for lower interest rates as the Bank of England, the US Federal Reserve and the European Central Bank have already begun their easing cycle. With this in mind, JGGI outperformed its benchmark, which was the result Portfolio manager Stock selection.

Investment manager‘s comments on performance, longer term and over the past year

“The factors that have influenced the market over the past year are all a reflection of the particularly volatile and unusual conditions investors have faced since the turn of the millennium. During this time of war, pandemics, inflation and high interest rates, we also experienced two strong growth markets in 2020 and 2023, separated by strong value rotation.

“We are pleased with the level of outperformance we have achieved over this period despite these diverse challenges. What is important is not the amount, but the quality of the returns. There are a few key features we think are worth highlighting:

1. This performance is not the result of one or two exceptional quarters, but of consistency over five years (since the current management team assumed responsibility);
2. These excess returns were generated across three major style rotations in the markets;
3. This performance was across a variety of sectors rather than concentrated in a few; And
4. Both US and international companies contributed to the returns.

“In our view, these successes reflect the strength of our fundamental equity research platform and its repeatability that leads to attractive equity opportunities.

“As for the year under review, the excess returns achieved during this period came from three main sources: our preference for owning high-growth stocks; our focus on stocks that can grow profitably; and our broader stock selection, which aims to identify high quality, attractively valued companies.

“Our positioning in high-growth names has been particularly good for the portfolio. Our greatest Overweight The focus is on the semiconductor industry, which was the best-performing industry in the fiscal year as demand for AI-driven processes and the leading chips that power them continued to grow. Our performance benefited from holding stocks such as Nvidia, which rose more than 190% (in GBP terms), and TSMC, which rose more than 70%. The earnings growth of these two companies has justified these strong share price increases so far, and with AI adoption still in its early stages, we see a long growth path ahead for these and several other portfolio holdings most exposed to the AI ​​revolution .

“Portfolio holdings that contributed to returns thanks to their profitable growth included Meta, Amazon and Uber – all stocks that are capital disciplined. These three companies have all outperformed the high-growth part of the market thanks to their strong competitive positions in their respective sectors free cash flow generation as a result.

“With respect to our broader stock selection, over 60% of the sectors in which we were invested contributed performance over the year. In healthcare, for example, demand for Novo Nordisk’s obesity drug continues to rise, and there is increasing positive evidence that the drug could help treat related diseases. This continued success has resulted in Novo Nordisk’s share price almost doubling during the period. Another example is the US-based insurance company Progressive. The company was one of the main beneficiaries of an increase interest rate Environment that leads to a strong bottom line.

“While all of these factors have supported performance over the past year, our caution about the near-term economic outlook discussed above has made us wary of the low-growth, cyclical parts of the economy, such as commodity-exposed names and cyclical industrials. Instead, we are overweight defensive sectors such as high-quality financial and payments companies as they face at least the risk of short-term earnings declines. However, this defensive positioning has proven to be a drag on relative performance over the past year, as cyclical stocks have continued to outperform defensive stocks.”

Investment manager’s comments on market outlook and positioning for 2025

“In our global investment universe of around 2,500 stocks, the chances of finding attractively valued, high-quality companies continue to be great. The two key areas where we continue to see attractive opportunities are high-growth stocks, particularly those related to semiconductor production, and defensive sectors, where we believe valuations have not looked this attractive in over 15 years.

“Demand for semiconductors is supported not only by the growing demand for AI tools discussed above, but also by the continued spread of digitalization and technology in its many other forms.

“For example, remote work and online entertainment trends sparked by the pandemic have led to increased demand not only for PCs, tablets and consoles, but also for the computer storage capabilities that power them. AI processes also require more powerful memory and associated hardware. In response to these trends, we have increased our exposure to companies providing storage for computers and smartphones, through a significant position in Korea’s SK Hynix listed Market leader in state-of-the-art storage services. We also hold Samsung Electronics, a global leader in consumer electronics, which we expect to benefit as AI-based tools become increasingly popular.

“The transition to renewable energy sources and electric vehicles will provide further impetus to this growing demand for semiconductors and related technologies, and we see many attractive structural investment opportunities in this area. For example, our investments in U.S. utilities that are leaders in the transition and use of renewable energy, such as NextEra Energy and Southern Company. Both companies have benefited from a supportive regulatory environment in the US, but regardless of the political backdrop, we believe the transition will continue to provide opportunities for investors.

“Our concerns about the near-term economic and corporate outlook discussed above have led to some portfolio adjustments over the past year. The most significant change was the change of one Underweight to an overweight in defensive consumer businesses such as food and beverage companies. For example, we added new positions in Swiss food and beverage company Nestlé and Heineken, a Dutch brewer, where we expect stable performance even as growth slows. The valuations of these two companies were also attractive.

“These new purchases were funded by the divestment of a number of defensive, asset-light services businesses such as insurance group Progressive (mentioned earlier) and Swiss reinsurance group Zurich Reinsurance. Both stocks contributed to relative returns over the period and are considered high-quality franchises due to their higher costs Evaluation We sold our holdings.

“Otherwise, we see the prospects for suppliers of aircraft components as positive. The aerospace industry is struggling to meet strong demand. Airbus’ order books are full through 2030, and Boeing’s production is below its historic high after a series of fatal accidents and equipment failures. As a result, aircraft are getting older and require more maintenance and spare parts. This benefits aircraft component manufacturers such as Honeywell from the USA and Safran from France, both of which are included in our portfolio.”