jpmorgan american investment trust plc annual general meeting · investment process. bottom up...

JPMorgan American Investment Trust plc Annual General Meeting2 May 2019

1

Agenda

Performance review

Current asset allocation and Trust structure

Current economic and market data

Appendix - Proposed Investment Strategy

2

JPMorgan American Investment Trust plc: 2018 Results

1Source: J.P. Morgan Asset Management and based on cum income debt at fair. 2Source: © Morningstar. All Rights Reserved. The Company’s benchmark index is the S&P 500 Index, net of the appropriate withholding tax, expressed in sterling total return terms. Past performance is not necessarily a reliable indicator for current and future performance.

NAV return1 +0.6%

Return to Shareholders2 -0.2%

S&P 500 Composite Index (£) +1.3%

Interim Dividend (Net) Payment (October 2018) 2.50p

Final Dividend (Net) Proposed Payment (May 2019) 4.00p

Total Dividend for the financial year ended 2018 6.50p

3

Performance attribution

Source: J.P. Morgan Asset Management, © Morningstar. All Rights Reserved. All figures are on a total return basis. Performance attribution analyses how the Company achieved its recorded performance relative to its benchmark index. Past performance is not necessarily a reliable indicator for current and future performance.

JPMorgan American Investment Trust plc

Contributions to total returns Year ended 31 December 2018

Net asset value total return (in sterling terms) 0.6%

Benchmark total return (in sterling terms) 1.3%

Excess return -0.7%

Contributions to total returns

Large cap portfolio –1.0%

Allocation effect 0.0%

Selection effect –1.0%

Small cap portfolio 0.0%

Allocation and selection effect 0.0%

Gearing (including change in the fair value of the debenture) 0.8%

Cost of debt -0.3%

Currency hedge -0.1%

Share issuance / buy back 0.3%

Management fee/expenses -0.4%

Total -0.7%

4

One year performance attribution

Source: Wilshire. 1The attribution summary approximates the gross excess returns of the portfolio and is calculated based on daily holdings which does not represent actual trading, liquidity constraints, fee schedules and transaction costs. It is shown for illustrative purposes only and is not meant to be representative of actual results. *Indicates stock was not held as of 31 December 2018. The Trust 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. Excludes Cash & Gearing (USD). Past performance is not a reliable indicator of current and future results.

JPMorgan American Investment Trust plcFor the one year period ending 31 December 2018

Sector attribution (%)

1.0 0.5 0.2 0.2 0.2 0.1

-0.1 -0.1 -0.3-0.9

-1.5-2.0-1.00.01.02.0

Communi-cation

Services

InformationTechnology

Energy Utilities Industrials Materials Real Estate ConsumerStaples

Health Care ConsumerDiscretionary

Financials

Attribution summary1 Stock: -0.82%Sector: +0.03%

Benchmark S&P 500 Index

Top Contributors Relative weight (%)

Stock return (%)

Impact (%)

Microsoft 1.4 20.8 0.59

Humana 1.4 16.3 0.51

Facebook* -1.5 -25.7 0.41

Anthem 0.7 18.1 0.35

General Electric* -0.3 -55.4 0.34

Top Detractors Relative weight (%)

Stock return (%)

Impact (%)

Amazon.com -2.4 -6.9 -0.68

Citigroup 1.9 -28.5 -0.68

AIG 2.0 -32.1 -0.50

United Rentals 1.2 -43.2 -0.49

Citizens Financial Group 1.7 -27.4 -0.49

Stock attribution

5

Performance

Source: J.P. Morgan Asset Management. 1Competitive universe based on EAA OE US Large Cap Blend Morningstar category. © 2019 Morningstar. All Rights Reserved.Figures over 1 year are annualised. Performance figures are those of the JPM American Investment Trust using NAV Cum Par Total Return in sterling versus the S&P 500 Total Return Index (net of 15% withholding Tax). Past performance is not necessarily a reliable indicator for current and future performance.

JPMorgan American Investment TrustAs of 31 March 2019

ThreeMonths

One year

Three years

Five years

Tenyears

JAMIT – NAV Cum Par (%) 9.60 16.09 16.49 15.22 15.85

Benchmark Return (%) 10.99 17.53 16.92 16.15 16.66

Excess Return (%) -1.39 -1.44 -0.43 -0.93 -0.81

Morningstar percentile ranking1 79 43 18 21 10

Number of Funds1 458 449 383 317 251

Annualised performance in GBP (%)

Trust Size GBP 1,001.0 m

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

JAMIT – NAV Cum Par (%) 12.60 17.91 0.28 9.19 32.44 20.88 4.97 31.22 13.08 0.47

Benchmark Return (%) 12.19 18.32 2.55 10.53 29.52 20.39 6.92 33.11 10.95 1.26

Excess Return (%) +0.41% -0.41% -2.27% -1.34% +2.92% +0.49% -1.95% -1.89% +2.13% -0.79%

Calendar year performance in GBP (%)

6

Agenda

Performance review




7

Asset allocation

Source: J.P. Morgan Asset Management as at 31 March 2019. The Trust 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. *Figures may not add up to 100% due to the removal of the allocation to the US Small & Micro Cap and unquoted portions of the Investment Trust.

As of 31 March 2019

31-Mar 19 31-Dec 18 30-Sep 18 30-Jun 18 31-Mar 18 31-Dec 17 30-Sep 17 30-Jun 17 31-Mar 17

Large Cap Portfolio 96.2% 98.1% 98.1% 94.6% 92.8% 93.7% 93.5% 92.8% 92.6%

Small Cap Growth Portfolio 2.8% 1.0% 1.0% 4.8% 5.4% 4.9% 5.0% 5.7% 6.2%

Liquidity 1.0% 0.9% 0.9% 0.6% 1.7% 1.3% 1.2% 1.3% 1.0%

Unrealized Hedge Value 0.0% 0.0% 0.0% 0.0% 0.1% 0.1% 0.2% 0.1% 0.1%

Total* 100% 100% 100% 100% 100% 100% 100% 100% 100%

Actual Gearing -1% -1% 4% 5% 9% 9% 9% 9% 9%

8

Agenda

Performance review




9

Corporate profits

GTM – U.S. | Page 7

10

Uses of profits


11

Corporate debt


12

The length of expansions


13

Economic growth and the composition of GDP


14

Consumer finances


15

Unemployment and wages


16

Yield curve and equities


17

Bear markets and subsequent bull runs

GTM – U.K. | Page 54

18

Executive summary: US market outlook

Source: J.P. Morgan Asset Management. Opinions, estimates, forecasts, projections and statements of financial market trends are based on market conditions at the date of the publication, constitute our judgment and are subject to change without notice. There can be no guarantee they will be met.

Economy

Consumers

Earnings

Valuations

Expect slow but steady economic growth

US consumer remains in good shape

US earnings continue to grow

Market valuations on earnings based metrics look reasonable

As of 31 March 2019

19

Agenda

Performance review




20

Proposed changes overview

Source: J.P. Morgan Asset Management.

As of 20 March 2019

Large Cap Portfolio Change

On 20 March 2019 the Board of JPMorgan American Investment Trust plc announced its intention to change the large-cap component of the Company by switching to a higher-conviction investment approach, subject to shareholder approval

Performance Fee The performance fee on the JPMorgan American Investment Trust plc has been removed and backdated to 1 January 2019

Management Fee The Manager has agreed to waive their management fee for a period of nine months commencing on the date of the adoption of the proposed strategy on 1 June 2019

21

Large Cap Portfolio

Overview of proposed portfolio changes

Source: J.P. Morgan Asset Management.

ProposedPortfolio Allocation

No Change

• Change the investment process to a concentrated value/growth portfolio

• Change the portfolio managers

Small CapPortfolio Manager: Eytan Shapiro

GearingNo Change

Current Portfolio Allocation

Large Cap Portfolio

Portfolio Manager: Garrett Fish

Small CapPortfolio Manager: Eytan Shapiro

Gearing

Allocation Range

90% -100%

0 – 10%

-5 – 20%

Timothy Parton(Growth)

Jonathan Simon(Value)

40 - 60% 40 - 60%

22

Overview of large cap portfolio

Source: Wilshire. The Trust 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.

As of 31 March 2019

Current Large Cap Portfolio

Proposed Large Cap Portfolio

Investment Process Bottom up stock selection using a quantitative and qualitative process

Bottom up stock selection combining value and growth

Benchmark S&P 500 Net S&P 500 Net

Portfolio Manager(s) Garrett Fish Jonathan Simon & Timothy Parton

Expected Holdings Range 60-100 30-40

Number of Holdings 61 40

Largest Absolute Sector Weight Information Technology (21.7%) Information Technology (18.8%)

Largest Absolute Stock Position Apple (5.9%) Microsoft (5.9%)

23

Overview of proposed changes to large cap portfolio: Co-portfolio managersAs of 31 December 2018

Jonathan K.L. SimonJonathan K.L. Simon, Managing Director, is a portfolio manager in the US Equity Group. An employee since 1980, Jonathan manages theJPMorgan Mid Cap Value Strategy, the JPMorgan Value Advantage Strategy, and the JPMorgan US Value Strategy. He is also the co-portfoliomanager with Tim Parton of the JPMorgan US Equity All Cap Strategy and the JPMorgan Equity Focus Strategy. In addition, he is the back-upportfolio manager of the JPMorgan Growth & Income Strategy, and the JPMorgan Equity Income Strategy. Jonathan joined the firm as ananalyst in the London office, and transferred to New York in 1983. He became portfolio manager in 1987 and served as president of RobertFleming's US asset management operations from 1990 until 2000. Jonathan holds an M.A. in mathematics from Oxford University.

Timothy PartonTimothy Parton, Managing Director, is a portfolio manager in the US Equity Group. An employee since 1986, Tim has managed a variety ofsmall and mid cap portfolios. He has been managing the JPMorgan US Midcap Growth strategy since November 2001; and the JPMorgan USMulticap Growth strategy since its inception in September 2005. He is also the co-portfolio manager with Jonathan Simon of the JPMorgan USEquity All Cap Strategy and the JPMorgan Equity Focus Strategy. Prior to this Tim was also a co-portfolio manger on the US Small Cap Growthstrategy. Tim holds a B.Sc. in economics and accounting from the University of Bristol in England. He is a member of the New York Society ofSecurity Analysts and is a CFA charterholder.

24

Overview of proposed changes to large cap portfolio:Proposed large cap portfolio investment philosophy overview

Jonathan SimonCo-Portfolio Manager

Industry Experience: 38Firm Experience: 38

“A flexible bottom-up approach to find the best quality growth and value ideas”

Timothy PartonCo-Portfolio Manager

Industry Experience: 32Firm Experience: 32

Proposed Large Cap Portfolio

Value Philosophy: focus on durable franchises with strong cash flows Durable franchise Strong cash flows Undervalued companies

Growth: focus on durable franchises with leading market share positions Large addressable markets Sustainable competitive

advantages Strong management teams

25

Performance in GBP

Source: J.P. Morgan Asset Management; Standard & Poor’s. Strategy performance is calculated in compliance with GIPS® standards, where segregated mandate portfolios and/or pooled funds, as relevant, managed in accordance with the strategy are grouped into a ‘composite’. Returns for periods less than one year are not annualized. Total return assumes the reinvestment of income. Excess returns are calculated on a arithmetic basis. Please refer to the GIPS Composite Disclosure slide. The performance results are time-weighted rates of return net of commissions, transaction costs and non-reclaimable withholding taxes, where applicable. Gross returns do not reflect the deduction of management fees or any other expenses that may be incurred in the management of the account. Actual performance will vary depending on security selection and the applicable fee schedule. *Since 28 February 2017, when Timothy Parton was added as co-portfolio manager. **Inception date: 31 July 2011. Past performance is not a reliable indicator of current and future results.

J.P. Morgan Equity Focus Strategy As of 31 March 2019

ThreeMonths

SixMonths

One Year

Since PM Change*

Three Years

Five Years

Seven Years

SinceInception**

JPM Equity Focus Strategy 10.89 -1.50 17.65 10.68 18.84 16.67 16.77 17.34

S&P 500 Total Return Index 11.08 -1.64 17.88 8.86 17.28 16.51 16.18 16.62

Arithmetic Excess Return -0.19 +0.14 -0.22 +1.83 +1.56 +0.16 +0.59 +0.72

Annualised performance (%)

Calendar year performance (%)

2012 2013 2014 2015 2016 2017 2018

JPM Equity Focus Strategy 13.81 38.35 15.38 11.13 30.30 14.57 2.35

S&P 500 Total Return Index 10.91 29.93 20.76 7.25 33.55 11.29 1.56

Arithmetic Excess Return +2.90 +8.42 -5.38 +3.88 -3.25 +3.28 +0.79

Market value

Strategy GBP 1,808 m

26

J.P. Morgan Equity Focus Institutional Composite - Annual performance report

Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation. 1. J.P. Morgan Investment Management Inc. (JPMIM or the Firm) consists of the assets of institutional clients invested in US

managed products including 1) the fixed income and cash assets formerly part of Chase Asset Management and MDSass&ChasePartners, 2) the New York institutional investment division of JPMorgan Chase Bank, N.A., formerly Morgan Guaranty Trust Company of New York, and 3) the institutional investment assets of JPMorgan Investment Advisors, Inc. (JPMIA), formerly knownas Banc One Investment Advisors Corporation (BOIA), the advisor to institutional assets directly managed by JPMIA or sub-advised by an affiliate institution, and 4) the institutional assets of Bear Stearns Asset Management Inc. The Firm also includes Separately Managed Accounts over which JPMIM has full and sole discretion. JPMIM is marketed under JPMorgan Asset Management.

2. The composite includes all discretionary accounts, including pooled funds, directly invested according to JPMIM's Equity Focus strategy. This strategy invests in a fundamental, concentrated, large cap core portfolio that combines the most compelling ideasfrom our US Growth and US Value teams managed against the S&P 500 Index. A strong emphasis is placed on portfolio construction and risk management to craft a well balanced portfolio with low correlation risk. Position sizes are determined by the conviction level of the portfolio managers based on the quality of the business, risk/reward characteristics and the diversification impact on the portfolio. Style tilt will likely deviate between 40%- 60% to value and growth. The composite was created in October 2012.

3. Equity futures are occasionally used in accordance with client-authorized account objectives and guidelines in order to equitize large cash contributions and to minimize market impact while purchasing individual equity securities.

4. Both gross and net returns reflect the reinvestment of income, deduction of transaction costs, and are net of withholding taxes where applicable. All returns are expressed in U.S. dollars. Gross returns do not reflect the deduction of investment advisory fees or any other expenses that may be incurred in the management of the account. Net returns are net of model investment advisory fees in effect for the respective time period. Model net returns are calculated by subtracting 1/4th of the highest applicable fee from the gross composite return on a quarterly basis. As of December 31, 2017, the standard annual fee schedule is as follows: 0.65% on the first $50 million of assets managed; 0.55% on the balance. Actual advisory fees charged and actual account minimum size may vary by account due to various conditions described in Part IIA of Form ADV.

5. The firm’s list of composite descriptions and the policies for valuing portfolios, calculating performance and preparing compliant presentations are available upon request.

6. The benchmark is the S&P 500 Index. The index returns are provided to represent the investment environment existing during the time periods shown and are not covered by the report of independent verifiers. For comparison purposes the index is fully invested, which includes the reinvestment of income. The returns for the index do not include any transaction costs, managementfees or other costs.

7. The three-year annualized standard deviation measures the variability of the composite and the benchmark returns over the preceding 36-month period. The standard deviation of the composite and benchmark are not presented (“n/a”) for periods where the composite does not have a 36-month history.

8. The internal dispersion of annual returns is measured by the asset-weighted standard deviation of gross account returns included in the composite for the full year. For periods with 5 or fewer accounts included for the entire year, internal dispersion is not presented (n/a) as it is not considered meaningful.

9. Past performance is no guarantee of future results. As with any investment vehicle, there is always the potential for gains as well as the possibility of losses.

J.P. Morgan Investment Management Inc. claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. J.P. Morgan Investment Management Inc. has been independently verified for the period from 2001-2016. The verification report is available upon request.

27

Investment objective and policy

Risk information The investment objective of a trust may allow some flexibility in terms in portfolio composition.

Exchange rate changes may cause the value of underlying overseas investments to go down as well as up.

Investments in smaller companies may involve a higher degree of risk as these are usually more sensitive to price movements.

Shares in smaller companies and emerging markets are generally traded less frequently than those in larger companies and established markets.

This means that there may be difficulty in both buying and selling shares and individual share prices may be subject to short-term price fluctuations.

External factors may cause an entire asset class to decline in value. Prices and values of all shares or all bonds could decline at the same time.

The Company may borrow to finance further investment (gearing). The use of gearing is likely to lead to volatility in the Net Asset Value (NAV) meaning that a relatively small movement, down or up, in the value of the Company’s assets will result in a magnified movement, in the same direction, of that NAV.

Investment objective and policyAims to achieve capital growth from North American investments by outperformance of the S&P 500 index. The company will predominantly invest in quoted companies including, when appropriate, exposure to smaller capitalisation companies. The company has the ability to use borrowing to gear the portfolio within the range of 5% net cash to 20% geared in normal market conditions.

28

J.P. Morgan Asset Management

This is a marketing communication and as such the views contained herein do not form part of an offer, nor are they to be taken as advice or a recommendation, to buy or sell any investment or interestthereto. 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 AssetManagement 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. Anyforecasts, 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 ofthis 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 ornotification 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 getback the full amount invested. Changes in exchange rates may have an adverse effect on the value, price or income of the products or underlying overseas investments. Past performance and yield arenot reliable indicators of current and future results. There is no guarantee that any forecast made will come to pass. Furthermore, whilst it is the intention to achieve the investment objective of theinvestment products, 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. andits affiliates worldwide. To the extent permitted by applicable law, we may record telephone calls and monitor electronic communications to comply with our legal and regulatory obligations and internalpolicies. Personal data will be collected, stored and processed by J.P. Morgan Asset Management in accordance with our EMEA Privacy Policy www.jpmorgan.com/emea-privacy-policy. Investment issubject to documentation. The Investor Disclosure Document, Key Features and Terms and Conditions and Key Information Document can be obtained free of charge from JPMorgan Funds Limited orwww.jpmam.co.uk/investmenttrust. This communication is issued by JPMorgan Asset Management (UK) Limited, which is authorised and regulated in the UK by the Financial Conduct Authority.Registered in England No: 01161446. Registered address: 25 Bank Street, Canary Wharf, London E14 5JP.

0903c02a825894d2

http://www.jpmorgan.com/emea-privacy-policy

jpmorgan american investment trust plc annual general meeting · investment process. bottom up...

Documents