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 & Sustainability 1

The past year: markets MSCI Emerging Markets index in GBP (rebased) 115 US tariffs on China Even more US July 2018 Brexit postponed tariffs on China Turkish equities March 2019 May 2019 and currency fall 110 August 2018 105 100 Chinese A shares decline 95 July 2018 … followed by India March 2019 90 Chinese market recovers… Bolsonaro elected Two day “value” rally More US tariffs US dollar strengthens 85 in Brazil January 2019 on China September 2019 June 2019 October 2018 August 2018 80 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 Source: Factset. MSCI. Data from 30th June 2018 to 30th September 2019. Past performance is not a reliable indicator of current and future results. 2

The past year: countries Sources of Total Returns – 30th June 2018 to 29th June 2019 - Countries 100% 80% 60% 39.9% 28.4% 40% 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% 20% 1.6% 0% -16.7% -20% -36.1% -40% -60% 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) 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. 3

The past year: sectors Sources of Total Returns – 30th June 2018 to 29th June 2019 - Sectors 70% 60% 50% 40% 30% 16.9% 20% 12.5% 10.4% 9.3% 4.9% 4.3% 10% 1.6% 1.3% -1.3% -5.7% 0% -7.4% -10% -24.6% -20% -30% -40% EM EN FI RE UT TC IA CS MT IT CD HC Dividend Valuation Chg EPS Growth (Lcl) Currency effect Total Return (USD) 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. 4

The past year: results JPMorgan Emerging Markets Investment Trust plc  Stock selection: +5.5%, asset allocation +3.1% 30 June 2018 – 30 June 2019  Positives: Financials, Information Technology, China, Korea, Taiwan Portfolio return 14.2%  Negatives: Thailand, Russia Index 5.0% Return on NAV 13.3%  Market volatility largely due to political factors (electoral cycles, trade tariffs, sanctions) Ordinary share price return 21.5% 30 June 2019 – 30 September 2019 Portfolio return 0.5% Index -1.1% Return on NAV 0.3% Ordinary share price return -1.4% 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. 5

The past year: longer term context MSCI Emerging Markets Index Performance in GBP MSCI Emerging Markets Index versus MSCI World Index Source: Bloomberg as of 30th September 2019. MSCI Emerging Markets Index. Past performance is not a reliable indicator of current and future results. 6

Diversification 7

Diversification of investments 50 80 45 70 40 60 35 % of portfolio 50 30 25 40 20 30 15 20 10 10 5 0 0 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) Source: J.P. Morgan Asset Management. Data as of 30th June 2019 8

Diversification of ideas Source: J.P. Morgan Asset Management. As of 31st October 2019 9

Finding good businesses 10

Finding good businesses: where to look? 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 Philippines UAE Phillipines Argentina Poland Chile Turkey Qatar 1% 1% 1% 1% 1% 1% 1% UK 1% Indonesia Malaysia Kenya 1% 2% 2% 1% Egypt Saudi Arabia Other 1% India 2% Chile 11% Mexico 16% 1% 2% Thailand Saudi Arabia 3% 1% Nigeria China 1% Russian 32% Singapore Federation 2% Russia 4% 2% Poland China South Africa 2% 14% Turkey 5% 3% Malaysia Brazil 3% 8% Korea Brazil 3% 7% South Korea Indonesia India South 12% 3% 9% Africa Thailand 7% Mexico Taiwan Taiwan 4% 5% 6% 12% Hong Kong 5% Source: J.P. Morgan Asset Management, MSCI. Data as of 31st October 2019. EM = Emerging Markets. 11

Finding good businesses: some new additions Moutai Midea Return on Return on equity 34% equity 25% Yum China Foshan Return on Return on equity 25% equity 34% 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. 12

Paying sensible prices 13

Paying sensible prices Portfolio Benchmark Portfolio yield over time 12-Month Forward Price to Earnings (x) 19.0 12.3 3.9 1.6 Price to Book Ratio (x) Dividend Yield (%) * 2.1 3.2 17.7 11.8 Return on Equity (%) 10.8 9.9 3-5 Year EPS Growth (%) 61 1131 Number of issuers -3.3 37.0 Net debt to equity (%) ** 75.7 Active share (%) 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. 14

Long term investing & Sustainability 15

Long term investing in practice Average market MSCI EM EPS EPS growth Continuously JMG holding participant holding Growth over JPM Company over period held since period (years) period (years, based holding period (USD annualized) on last three years) (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% -1% 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. 16

Sustainability: what does it mean? climate risk gender pay gap taxonomy proxy voting supply chain management negative screening social responsibility board composition water management environment corruption ethics global best practice mis-selling community engagement pollution responsible sourcing plastic waste exclusions gaming PRI data privacy employee satisfaction materiality framework energy transition carbon footprint Sustainalytics weapons tobacco shareholder representatives impact investing best in class cybersecurity GDPR cluster munitions ESG greenhouse gases ISS-Ethix integration microbeads governance biodiversity MSCI scores alcohol diversity emissions deforestation fossil fuels recycling adult entertainment independent directors UN global compact positive tilt SASB toxic waste VAR renewable energy purpose of a corporation duration CSI human capital white phosphorus thermal coal 98 questions norms & principles economics tailings dams development goals nuclear weapons labour relations financial inclusion 17

Sustainability: a mindset Four essential points Long term approach to investing Sustainability intrinsic to investment approach Therefore inseparable from alpha Industry approach continues to evolve Source: J.P. Morgan Asset Management 18