JPMorgan Emerging Markets Investment Trust plc Annual General - - PowerPoint PPT Presentation
JPMorgan Emerging Markets Investment Trust plc Annual General Meeting 13 November 2019 Austin Forey, Portfolio Manager Agenda The past year Diversification Finding good businesses Paying sensible prices Long term investing
13 November 2019
Austin Forey, Portfolio Manager
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Agenda
The past year Diversification Finding good businesses Paying sensible prices Long term investing & Sustainability
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The past year: markets
Source: Factset. MSCI. Data from 30th June 2018 to 30th September 2019.
Past performance is not a reliable indicator of current and future results.
MSCI Emerging Markets index in GBP (rebased)
80 85 90 95 100 105 110 115 06/30/18 07/31/18 08/31/18 09/30/18 10/31/18 11/30/18 12/31/18 01/31/19 02/28/19 03/31/19 04/30/19 05/31/19 06/30/19 07/31/19 08/31/19 09/30/19
US tariffs on China July 2018 Chinese A shares decline July 2018 Turkish equities and currency fall August 2018 More US tariffs
August 2018 Brexit postponed March 2019 Two day “value” rally September 2019 US dollar strengthens June 2019 Chinese market recovers… January 2019 … followed by India March 2019 Even more US tariffs on China May 2019 Bolsonaro elected in Brazil October 2018
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Sources of Total Returns – 30th June 2018 to 29th June 2019 - Countries
The past year: countries
Source: J.P. Morgan Asset Management, FactSet. Data as of 29th June 2019. EPS = Earnings per share.
Past performance is not a reliable indicator of current and future results.
1.6% 39.9% 28.4% 21.0%20.3%20.2%18.8% 12.7%11.1% 7.9% 5.7% 3.5% 3.0% 2.4% 1.9% -0.2% -0.8% -3.5% -6.5% -7.1% -8.6% -9.0%-11.0%
0% 20% 40% 60% 80% 100% EM Brazil Russia Indonesia Philippines Thailand Qatar Hungary Poland India Egypt Peru UAE Czech Taiwan South Africa Malaysia Colombia China Mexico Korea Greece Chile Turkey Pakistan Dividend Valuation Chg EPS Growth (Lcl) Currency effect Total Return (USD)
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Sources of Total Returns – 30th June 2018 to 29th June 2019 - Sectors
The past year: sectors
Source: J.P. Morgan Asset Management, FactSet. Data as of 29th June 2019. EPS = Earnings Per Share. EM: Emerging Markets, EN: Energy, HC: Healthcare, IT: Information Technology, MT: Materials, FI: Financials, RE: Real Estate, CS: Consumer staples, UT: Utilities, CD: Consumer Discretionary. IA: Industrials, TC: Telecommunications.
Past performance is not a reliable indicator of current and future results.
1.6% 16.9% 12.5% 10.4% 9.3% 4.9% 4.3% 1.3%
0% 10% 20% 30% 40% 50% 60% 70% EM EN FI RE UT TC IA CS MT IT CD HC Dividend Valuation Chg EPS Growth (Lcl) Currency effect Total Return (USD)
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The past year: results
Source: J.P. Morgan Asset Management. Data as of 30 September 2019. All figures are on a total return basis. Change in share price with dividends reinvested. The portfolio is actively managed. Holdings, sector weights, allocations and leverage, as applicable, are subject to change at the discretion of the investment manager without notice. NAV = Net Asset Value. Index = MSCI Emerging Markets Index with net dividends reinvested, in sterling terms.
Past performance is not a reliable indicator of current and future results.
30 June 2018 – 30 June 2019
Portfolio return 14.2% Index 5.0% Return on NAV 13.3% Ordinary share price return 21.5%
30 June 2019 – 30 September 2019
Portfolio return 0.5% Index
Return on NAV 0.3% Ordinary share price return
JPMorgan Emerging Markets Investment Trust plc
Stock selection: +5.5%, asset allocation +3.1% Positives: Financials, Information Technology, China,
Korea, Taiwan
Negatives: Thailand, Russia Market volatility largely due to political factors
(electoral cycles, trade tariffs, sanctions)
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The past year: longer term context
Source: Bloomberg as of 30th September 2019. MSCI Emerging Markets Index.
Past performance is not a reliable indicator of current and future results.
MSCI Emerging Markets Index Performance in GBP MSCI Emerging Markets Index versus MSCI World Index
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Diversification of investments
Source: J.P. Morgan Asset Management. Data as of 30th June 2019
10 20 30 40 50 60 70 80 5 10 15 20 25 30 35 40 45 50 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Top ten holdings (LHS) Total holdings (RHS) % of portfolio
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Diversification of ideas
Source: J.P. Morgan Asset Management. As of 31st October 2019
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Finding good businesses: where to look?
Source: J.P. Morgan Asset Management, MSCI. Data as of 31st October 2019. EM = Emerging Markets.
Breaking down our research coverage by strategic classification
Benchmark MSCI Emerging Markets Index (Net)
Premium and Quality Stocks by Country MSCI EM Benchmark by Country
China 32% South Korea 12% Taiwan 12% India 9% Brazil 8% South Africa 5% Russian Federation 4% Thailand 3% Mexico 2% Saudi Arabia 2% Indonesia 2% Malaysia 2% Philippines 1% Poland 1% Qatar 1% Chile 1% UAE 1% Turkey 1% India 16% China 14% Brazil 7% South Africa 7% Taiwan 6% Mexico 5% Hong Kong 5% Thailand 4% Indonesia 3% Korea 3% Malaysia 3% Turkey 3% Poland 2% Russia 2% Singapore 2% Nigeria 1% Saudi Arabia 1% Chile 1% Egypt 1% UK 1% Kenya 1% Phillipines 1% Argentina 1% Other 11%
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Finding good businesses: some new additions
Source: J.P. Morgan Asset Management. Data as of 30th September 2019. Image source: Shutterstock The securities above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell.
Moutai Return on equity 34% Midea Return on equity 25% Yum China Return on equity 25% Foshan Return on equity 34%
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Paying sensible prices
Source: J.P. Morgan Asset Management, Factset, IBES. Data as of 30th September 2019. EPS = Earnings per share. The portfolio is actively managed. Holdings, sector weights, allocations and leverage, as applicable, are subject to change at the discretion of the Investment Manager without notice. *Portfolio yield is the aggregate weighted sum of the estimated yields of the stocks in which the portfolio invested. It is calculated as (12-month forward DPS / Current price)*100. It is not based on the portfolio's dividend distributions. **Net debt to equity ratio excludes financials.
Portfolio Benchmark
12-Month Forward Price to Earnings (x) 19.0 12.3 Price to Book Ratio (x) 3.9 1.6 Dividend Yield (%)* 2.1 3.2 Return on Equity (%) 17.7 11.8 3-5 Year EPS Growth (%) 10.8 9.9 Number of issuers 61 1131 Net debt to equity (%)**
37.0 Active share (%) 75.7
Portfolio yield over time
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Long term investing in practice
Source: J.P. Morgan Asset Management, Data as of 30th September 2019. * indicates ADR listing; JMG = JPMorgan Emerging Markets Investment Trust plc. EM = Emerging Markets. EPS = Earnings per share. The portfolio is actively managed. Holdings, sector weights, allocations and leverage, as applicable, are subject to change at the discretion of the Investment Manager without notice.
Company Continuously held since JMG holding period (years) Average market participant holding period (years, based
EPS growth
(USD annualized) MSCI EM EPS Growth over JPM holding period (USD annualized) Wal-Mart De Mexico 1994 24 1.3 9% 6% HDFC 1998 20 2.3 17% 9% TSMC 1999 19 2.3 15% 9% Infosys* 2001 17 0.3 16% 8% President Chain Store 2001 17 1.8 11% 8% Unilever Indonesia 2001 17 2.6 13% 8% Bank Rakyat Indonesia 2003 15 2.0 13% 7% Banco Itau* 2004 14 0.6 9% 4% Lojas Renner 2006 12 0.8 15% 3% AIA 2010 8 2.2 16% 0% Capitec 2011 7 1.4 12%
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Sustainability: what does it mean?
plastic waste greenhouse gases
social responsibility
adult entertainment
climate risk
recycling
energy transition
ethics
renewable energy
cluster munitions employee satisfaction
white phosphorus
gaming
diversity water management purpose of a corporation
best in class
alcohol
fossil fuels
UN global compact
thermal coal MSCI scores
microbeads
human capital norms & principles 98 questions
impact investing
corruption
toxic waste weapons
materiality framework
deforestation board composition
negative screening
positive tilt
nuclear weapons labour relations
supply chain management
responsible sourcing
GDPR
data privacy
cybersecurity
financial inclusion mis-selling
global best practice
community engagement
Sustainalytics
pollution
ISS-Ethix SASB proxy voting integration
tailings dams
emissions
biodiversity
gender pay gap
taxonomy
shareholder representatives independent directors
VAR development goals
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Sustainability: a mindset
Source: J.P. Morgan Asset Management
Four essential points
Long term approach to investing Sustainability intrinsic to investment approach Therefore inseparable from alpha Industry approach continues to evolve
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Sustainability: carbon footprint
Source: MSCI
JPMorgan Emerging Markets Investment Trust plc as of 30th September 2019
Carbon Emissions
tons CO2e / $M invested
Total Carbon Emissions
tons CO2e
Carbon Intensity
tons CO2e / $M sales
Weighted Average Carbon Intensity
tons CO2e / $M sales
JPMorgan Emerging Markets Investment Trust plc
14.0 22,564 43.0 51.7
MSCI Emerging Markets Index
324.9 524,365 422.1 319.0
Aim / Purpose What is my portfolio’s normalized carbon footprint per million dollars invested? What is my portfolio’s total carbon footprint? How efficient is my portfolio in terms of carbon emissions per unit
What is my portfolio’s exposure to carbon intensive companies? Description Normalized measure of a portfolio’s contribution to climate change that enables comparisons with a benchmark, between multiple portfolios, and over time, regardless
Measures the carbon footprint of a portfolio – i.e. the total carbon emissions for which an equity portfolio is responsible – by summing up the proportionate carbon emissions of portfolio companies based on the investor’s
Expresses the carbon efficiency of the portfolio and allows investors to measure how much carbon emissions per dollar of sales are generated by portfolio companies. This metric adjusts for company size and is a more accurate measurement
than a portfolio’s absolute footprint. Since companies with higher carbon intensity are likely to face more exposure to carbon related market and regulatory risks, this metric indicates a portfolio’s exposure to potential climate change-related risks relative to other portfolios or a
share, it also facilitates comparison with non-equity asset classes.
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And finally…
Source: J.P. Morgan Asset Management. Data as of 30th June 2019
The purpose of active management
100 120 140 160 180 200 220 240 260 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Investment management contribution
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Investment objective and risk profile
Please refer to the latest PRIIPS Key Information Document and Company Annual Report & Accounts for more information relating to the trust.
JPMorgan Emerging Markets Investment Trust plc
Risk profile
Investing in emerging markets may involve a higher element of risk due to political and economic instability and underdeveloped
markets and systems, and may be illiquid.
Exchange rate changes may cause the value of underlying overseas investments to be volatile. Some investment trusts may have warrants or subscription shares in issue, which if exercised may have an effect on the net asset
value.
Investments in smaller companies may involve a higher degree of risk as these are usually more sensitive to price movements
Investment objective Capital growth from emerging markets worldwide. Invests in a diversified portfolio with no more than 50% of the Company’s assets invested in any one region.
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Important information
For Professional Clients only – not for Retail use or distribution. 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 interest thereto. 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 Asset Management 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. Any forecasts, 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 of this 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 or notification 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 get back 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 are not 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 the investment 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. and its 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 internal policies. 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 is subject 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 or www.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. Material ID: 0903c02a82741025