JPMorgan American: a new bestseller

It is a noteworthy event when a new entrant makes it onto the list of best-selling investment trusts at Fidelity Personal Investing. A recent example is JPMorgan American Investment Trust, which has attracted additional attention following the US election.

Investors have reacted positively to President Trump’s second term, as the regulatory relief, proposed business rate cuts and additional tariffs on imports are all seen as being good for earnings. The US stock market has moved higher as a result, although it is the fundamentals that really matter and it is too early to say how these will be affected once he takes office. 

Objective and approach 

JPMorgan’s flagship American trust offers a high conviction portfolio of US value and growth stocks that represent the managers' best ideas. It is designed to outperform the S&P 500 benchmark across market cycles and has built up a long track record of consistent performance. 

The four managers – two value and two growth − are supported by a New York-based team of approximately 40 analysts, including sector and small-cap specialists. They research the US equity market to find quality businesses with strong management and robust balance sheets that form the basis for the stock selection decisions.¹

The underlying portfolio

Co-manager Jack Caffrey recently gave an interview to the broker Peel Hunt in which he explained that they have both a growth and a value team, with each being responsible for around 20 names that together make up the 40 stocks in the portfolio.²  

“We own them in a size that if we are right it matters to the portfolio performance. At the same time I have always believed that concentration forces you to confront your mistakes and to confront your mistakes when they are small mistakes rather than be allowed to spiral.”

At the end of November the ten largest holdings accounted for 39.3% of the assets and included well-known names such as Microsoft, NVIDIA, Amazon, Meta, Apple and Kinder Morgan. The largest sector over weights relative to the benchmark were Financials, Consumer Discretionary and Energy, while the biggest underweight was Technology.³ 

JPMorgan American top 10 holdings

1. Microsoft
2. Nvidia
3. Amazon
4. Meta Platforms
5. Apple
6. Kinder Morgan
7. Capital One
8. Berkshire Hathaway
9. Loews
10. M&T Bank

Source: JPMorgan American Investment Trust factsheet, 30 November 2024

What are the managers’ latest views? 

During the interview, Caffrey said that they haven’t made any dramatic changes to the portfolio in the wake of the US election.⁴ 

“It is important to understand what policy prescriptions might actually look like over the next 12-24 months. I think that is the policy cycle that investors need to think in terms of.”

Over the course of the year they have been buying some of the consumer names, with Consumer Discretionary being the second largest overweight relative to the benchmark at the end of October. 

“Conditions on the ground have been stable. The US economy is 70% consumption, so if you are working and getting paid you are probably going to continue to behave the way you did in the past.”

Performance and discount

Over the five years to the end of November the trust generated an annualised share price total return of 20.3% which was well ahead of the 15.9% produced by the benchmark. Please remember past performance is not a reliable indicator of future returns. When measured over the last decade however the numbers are very similar and demonstrate how difficult it is to consistently beat such an efficient market.⁵

Unlike many investment trusts, JPMorgan American shares have consistently traded close to the underlying net asset value (NAV) with a 12-month average discount of just over one percent. This is due to the Board’s willingness to buyback or issue new shares whenever required.⁶ 

How do the costs stack up? 
It is great to see that the ongoing charges are just 0.38%, which is very low for an actively managed trust. This suggests that it is competitively priced for a market that tends to be dominated by index tracker funds. 

More on JPMorgan American Investment Trust

Past performance is not a reliable indicator of future returns
Source: Morningstar from 30.9.19 to 30.9.24. Basis: Total returns in GBP. Excludes initial charge.

Source:

¹ JPMorgan American Investment Trust, December 2024

^2,4 Peel Hunt, 12 November 2024
^3,5,6 JPMorgan American Investment Trust factsheet, 30 November 2024

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. The shares in this investment trust are listed on the London Stock Exchange and their price is affected by supply and demand. Investment trusts can gain additional exposure to the market, known as gearing, potentially increasing volatility. Overseas investments will be affected by movements in currency exchange rates. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of  Fidelity’s advisers or an authorised financial adviser of your choice.