We are finding value everywhere: here are our newest holdings

TL;DR

Georgina Brittain, fund manager at JP Morgan, discusses the current state of UK equities, highlighting the opportunities and undervalued assets available in the market.

Transcript

hello and welcome to our latest Insider interview today I'm joined by Georgina Brittain who is full manager of the JP Morgan midcap Investment Trust and the JP Morgan UK smaller companies Investment Trust Georgina great to have you today lovely to be here so Georgina UK equities have been out of favor for quite a long time now and we've seen over t... Read More

Key Insights

• ☠️ Midcap and small cap stocks in the UK have been negatively impacted by concerns about the economy, inflation, and interest rates.
• ☠️ When interest rates peak and inflation is under control, there is potential for these stocks to perform well.
• 👲 The entire UK market, including midcap and small cap stocks, is undervalued compared to historical levels.
• ❓ Opportunities exist for investors in various sectors, and the focus is on bottom-up stock picking.
• 😋 Recent portfolio activity includes investments in food and beverage companies, car distributors, and house builders.
• 🔒 Investment trusts managed by JP Morgan are trading at significant discounts, providing opportunities for private investors.
• 🔡 The UK's weight in the MSCI World Index has declined, but low valuations and potential for a turnaround make a case for investing in UK equities.

Questions & Answers

Q: What factors have caused midcap and small cap stocks in the UK to fall out of favor?

Concerns about the UK economy, inflation, and higher interest rates have led investors to be wary of midcap and small cap stocks, which are seen as a barometer of the UK economy.

Q: Are there any sectors or areas of the market that are trading at unjustly cheap valuations?

The entire UK market, including midcap and small cap stocks, is undervalued compared to historical levels. The PE ratio for the FTSE 250 is around 11, significantly lower than the long-term average of 14.

Q: Can you provide examples of recent portfolio activity and new holdings?

Some recent additions to the portfolio include Mitchell's and Butler, a food and beverage company, and a car distributor. Additionally, the fund manager has added to positions in house builders, despite current difficulties in the housing market.

Q: How do the investment trusts managed by JP Morgan offer an opportunity for private investors to buy UK equities at a discount?

The investment trusts managed by JP Morgan are trading on discounts of over 10%, offering private investors the chance to buy undervalued UK equities at an even greater discount.

Summary & Key Takeaways

• UK midcap and small cap stocks have been out of favor due to concerns about the UK economy, inflation, and interest rate increases.

• The belief is that when interest rates peak and inflation is under control, these market segments will perform well again.

• The entire UK market, including midcap and small cap stocks, is undervalued compared to historical levels.