Doceo Results Round-Up

The Results Round-Up: The week’s investment trust results

Lots of festive cheer in this week’s roundup with JPMorgan Japanese JFJ reporting a +24.2% NAV total return; Ecofin Global Utilities and Infrastructure EGL an even better +25.9% NAV per share total return; and Jupiter Green (JGC) clocking up a +19.3% share price total return. Global Smaller Companies Trust (GSCT) couldn’t match those heady numbers but that’s largely down to a cautious approach.

By Frank Buhagiar

JPMorgan Japanese (JFJ) a quarter up

JFJ reported a +24.2% net asset value (NAV) total return for the full year, e outstripping the benchmark’s +10.3%. The outperformance, no one-off either with the fund outperforming over five and ten years: +5.5% annualised five-year NAV total return (benchmark +5.1%); and +10.5% annualised ten-year NAV total return (benchmark +8.4%).

What makes this year’s eye-catching performance even more impressive is that the fund successfully completed a merger with JPMorgan Japanese Smaller Cos., pushing the combined fund’s net assets up to around £1bn. No taking the eye off the ball here then. In terms of performance, the Portfolio Managers believe there’s more to come “The transformation underway in Japan has, in our view, only just begun. The gains to be realised from corporate governance reforms and other structural changes will be much more significant than those we have seen to date.” Shares finished a little lower on the day, investors deciding to take some profits off the table after such a strong year perhaps.

Winterflood: “Outperformance attributed to enhanced focus on companies embracing corporate governance reform and market rotation towards growth as Yen appreciated near the end of the financial year. Private equity investors are increasingly active in Japan, and the managers ‘have never seen inbound M&A on this scale’.”

Numis: “We believe the outperformance is impressive given that ‘value’ has outperformed ‘growth’ in Japan over much of this period. The managers appear to have been rewarded for tweaks to their approach to be more valuation aware, whilst still focusing on high quality companies, with strong market positions, balance sheets and cash flow generation.”

Investec: “The manager has a distinct investment philosophy which features a high conviction and unconstrained approach, and the identification of high-quality growth companies that can compound earnings sustainably over the long term. The manager has said that the biggest reason to invest in Japan is improving corporate governance. Meanwhile, Japan appears to have finally crossed a critical inflation threshold. This is a very constructive backdrop, and we reaffirm our Buy recommendation.”

Ecofin Global Utilities and Infrastructure (EGL) a quarter up too

EGL put in a full-year p that technology-focused funds would be proud of: NAV per share increased +25.9% on a total return basis while share price total return was +24.8%. The utility investor beat comparable global sector indices as well as general equity benchmarks such as the FTSE All-Share and MSCI World indices. NAV and share price total returns since inception eight years ago are now up to +10.2% and +11.8% per annum respectively. According to Chairman David Simpson “The portfolio was well positioned for the recovery in share valuations of utilities and the resurgence in interest in nuclear power.”

Sounds like the portfolio continues to be well-placed for the future too “We believe that the total return prospects for the Company’s portfolio are very encouraging while the broad array of the sub-sectors in which we invest gives investors excellent portfolio diversification.” Shares took a well-deserved breather on the day of the results, finishing a penny lighter at 175p.

Winterflood: “Positive performance was seen across the utility, environmental services and transportation infrastructure portfolio segments and was especially strong in the US. Stock selection was beneficial, with the portfolio well positioned for the recovery in share valuations of utilities and the resurgence in interest in nuclear power. Increasing power demand and infrastructure CapEx are driving earnings growth for portfolio companies, while valuation multiples for these essential assets businesses remain low.”

The Global Smaller Companies Trust (GSCT) proceeding with caution

GSCT’s +2.7% NAV total return for the half year c match the benchmark’s +5.7%. The fund’s focus is to invest in high quality, well-managed, soundly financed and profitable companies. That ought to come in handy should the lead manager’s warning that complacency is setting in proves to be right “There are many uncertainties today, yet we have seen the valuation of equities expand and spreads on corporate bonds narrow. It looks like complacency is setting in and so we think it is right to proceed with caution but to take advantage of any opportunities that present themselves.” Market appears to have heeded the fund manager’s words of caution with the shares finishing the day 1.8p lower at 166p.

Winterflood: “Asset allocation had little effect on relative performance, with attribution from overweight in UK offset by underweight in North America.”

Jupiter Green (JGC), going out on a high?

JGC’s half-year results overshadowed by the company’s announcement that it is proposing a scheme of reconstruction. Under the proposals, shareholders would have the choice of rolling over their investment into units in Jupiter Ecology Fund, a unit trust that invests in “the same underlying environmental solutions themes as the Company managed by the same investment team at Jupiter” or electing for an uncapped cash exit at a modest discount to NAV. If approved by shareholders at a soon-to-be-called general meeting, the proposals would be expected to take effect in Q1 2025. That means this could well e JGC’s fina Half-year Report. If that’s the case, then the fund is going out with something of a bang. During the six-month period, share price total return came in at +19.3%. NAV total return, a little more sedate at +2.5% but that was still better than MSCI World Small Cap (£) Index’s -0.8%. Market liked what it heard, shares closed up 5p on the day at 233p.

Numis: “It is unsurprising to see the fund winding up, given it is sub-scale (c.£40m market cap) and that the Board had been reviewing strategic options since July. The shares currently trade on a c.10% discount to NAV.”

Winterflood: “We commend the Board for offering an appropriate rollover vehicle for those wanting to stay invested in the strategy.”