The four stocks we are backing from the ‘Magnificent Seven’ | Summary and Q&A

TL;DR

James Cook, manager of the JP Morgan Global Growth and Income Investment Trust, discusses their investment process and performance, focusing on their agnostic approach to stock selection and their ability to deliver returns in both growth and value regimes.

Key Insights

• ✋ JP Morgan's investment strategy focuses on delivering high returns in various market regimes, including growth, value, and AI growth.
• 🪐 The trust's dividend payout policy is based on a percentage of the net asset value, which can be subject to volatility in the equity market.
• 😤 Their research team, comprised of over 80 analysts worldwide, allows for extensive coverage and in-depth analysis of potential investment opportunities.
• ✋ Less than 3% of the stocks they analyze make it into the final portfolio, making it a highly concentrated and high conviction strategy.
• 🔬 The trust is style agnostic, meaning they can invest in any type of company, including growth, value, and cyclical stocks.
• 🥹 JP Morgan holds four of the "Magnificent Seven" technology companies, selected based on their potential to monetize AI and have stronger barriers to entry.
• 💋 The trust mainly sticks to developed markets, but also has investments in emerging markets, such as India and Mexico.

Transcript

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Questions & Answers

Q: How does JP Morgan Global Growth and Income Investment Trust balance capital growth and income in their stock selection process?

The trust focuses on stocks with the highest total expected returns, regardless of whether they come from growth or dividends. The goal is to have stocks that perform well in both growth and value periods.

Q: What potential drawbacks are associated with generating income from capital growth?

If the equity markets fall, the net asset value of the trust will also decrease, which can result in more volatile dividends. The decision to adjust dividends is made by the board.

Q: How does JP Morgan achieve such a comprehensive coverage of companies worldwide?

JP Morgan has over 80 analysts worldwide, each covering a sector within a region. This allows them to have a breadth of coverage and conduct rigorous research on the best companies.

Q: What criteria does JP Morgan use to select stocks for their portfolio?

The three main criteria are significant valuation upside, clear insight into what will make the stock perform, and high conviction in the company's control over its destiny.

Summary & Key Takeaways

• The JP Morgan Global Growth and Income Investment Trust aims to deliver capital growth and income by selecting stocks with high total expected returns.

• Over the past 5 years, they have successfully delivered excess returns in growth, value, and AI growth regimes.

• The trust's payout policy is to give out 4% of the net asset value as dividends, but this can be volatile depending on the performance of the equity market.