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JPMorgan Elect - Managed Income: June 2021 update

In this investment trust update, Senior Investment Analyst David Holder shares our analysis of the manager, process, culture, cost and performance of the JPMorgan Elect - Managed Income Trust.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

  • This part of the trust is managed by experienced duo Katen Patel and John Baker
  • The focus is on providing a higher but principally growing level of income paid quarterly
  • JPMorgan has exceptional strength of global analytical and fund management resource
  • This trust will only invest in UK companies and fully incorporates ESG considerations into the process

How it fits in a portfolio

JPMorgan Elect plc is an investment trust with a choice of options to meet various needs: income, growth, capital preservation, or a combination of all three. Investors can switch how much they invest between the three options on a quarterly basis, without paying UK capital gains tax, although tax rules can change and benefits depend on personal circumstances.

The JPMorgan Elect - Managed Income portfolio aims to provide a growing income with the potential for some capital growth from a portfolio of UK shares. The JPMorgan Elect Managed Growth portfolio aims for long-term capital growth by investing in other investment trusts and open-ended funds that invest across the globe. The JPMorgan Elect Managed Cash portfolio aims to shelter investors’ wealth and offers a yield based on short-term interest rates.

In this review, we look at the JPMorgan Elect - Managed Income portfolio. We think the trust could fit as part of an income portfolio or add UK exposure to a broader diversified portfolio. Investors in investment trusts should be aware they can trade at a discount or premium to the net asset value (NAV).


John Baker and Katen Patel jointly manage this trust. Baker joined JPMorgan in 1994 and has spent his entire career at the company. He was appointed to manage this trust in 2008. Patel has been at JPMorgan since 2013 and was appointed to the trust in 2018. He also manages UK mid cap and smaller companies’ funds. Prior to JPMorgan he worked at HSBC in equity sales.


The managers look for three key features in the companies they invest in. They like to find undervalued companies, but where there is a catalyst for recovery, or where demand is improving. They also look for quality companies, those that are market leaders, with barriers to entry from competition or good records of successfully investing in their business. Finally, they look for companies that are improving quarter on quarter, those who have made successful acquisitions, or benefit from disruptive technology.

Not all the companies they invest in will share every one of these characteristics, but in aggregate the trust does illustrate these traits. This should allow it to provide a smoother ride, because it isn’t so beholden to any one theme or investment style. The portfolio evolves over time rather than changing dramatically from month to month.

The managers are positive on the outlook for UK shares. The valuations of UK companies are lower compared to many overseas markets. The UK has been unloved by investors, but there are signs that this may be changing. The success of our COVID vaccine programme means the UK economy has started to open up before many others, and this has boosted economic growth expectations.

The largest sector exposures in the portfolio are banks, general retail and home construction. The managers recently added to some existing investments whose prospects are more focused on the strength of the UK economy, such as home furnishings retailer Dunelm and housebuilder Bellway.

They made new investments in Halfords and Keller. Halfords has diversified into car servicing, minor repairs and diagnostics to add to its existing automotive, cycling and outdoors products. Keller is a more globally diversified specialist civil engineering and infrastructure business. The managers also sold some companies on the back of strong performance, such as Sabre Insurance and those which fell out of favor, such as Aviva.

The trust can borrow to invest (gearing) to increase potential returns to shareholders. Gearing increases risk as it magnifies losses when stock markets fall. The company’s policy is to range between 85% and 112.5% invested. At the end of May 2021 the level was 106%.

Potential investors should refer to the latest annual reports and accounts for details of the risks and charging structure.


JPMorgan is one of the world's biggest asset managers. It has investment professionals based all over the world, and the team behind this trust can tap into this experience and wider resource.

JPMorgan believes companies should act in a socially responsible way. They recognise that non-financial issues such as social and environmental factors have the potential to impact the share price, as well as the reputation of the company. The team fully incorporate these considerations into their company analysis. The outcome of this work will potentially impact the attractiveness of the company, or the amount the managers are willing to pay for it. This trust doesn’t exclude potential investments on the basis of their ESG (Environmental, Social and Governance) credentials, but the managers will actively seek to engage with company management to prompt positive change in the business.


The trust's annual ongoing charge is 1.08%. Investors should refer to the latest annual reports and accounts and Key Investor Information for details of the risks and charging structure.

If held in a SIPP or ISA the HL platform fee of 0.45% (capped at £200 for a SIPP and £45 for an ISA) per annum also applies. Our platform fee doesn’t apply if held in a Fund and Share Account.


Most UK equity income trusts had a tough first half to 2020 as the COVID pandemic severely impacted many companies’ ability or willingness to pay dividends. In the first half of 2020 the trust’s share price fell 20.7%* compared to a fall of 17.5% for the FTSE All Share. Companies whose prospects were linked to the health of the economy (cyclical sectors) fared the worst, such as travel & leisure, banks and oil. Please remember past performance isn’t a guide to future returns.

The second half of 2020 saw markets recover. Positive signs of a COVID vaccine, a Biden victory in the US presidential election and the perceived resolution of Brexit helped to improve investor sentiment. Some of the more cyclical sectors such as mining, travel & leisure and general retailers performed strongly whilst healthcare, utilities and oil & gas underperformed. In this period the trust’s share price returned 12% vs the FTSE All Share return of 9.3%.

Performance was strong over 12 months to the end of May 2021. The trust returned 30% which compares to the FTSE All Share return of 23%. Stock selection in financials and software helped performance with holdings in OSB Group and Computacentre contributing well. At the other end of the spectrum GlaxoSmithKline and Taylor Wimpey detracted over this period.

Overall, the fund has delivered similar performance to the FTSE All Share since inception in December 2000.


UK stock market dividends fell 38% in 2020, compared to growth of 2.8% in 2019. Overall larger companies fared better than smaller companies, and some sectors were impacted worse than others. The travel & leisure industry was severely impacted by travel restrictions, while banks were forced to withhold dividend payments by the Prudential Regulation Authority. Meanwhile food retailers in aggregate actually grew their dividends.

Against this backdrop the trust’s revenue fell 23% with further modest falls forecast for the financial year to the end of August 2021. The managers still expect the trust to yield more than the broader UK stock market, although this is not guaranteed. They don’t expect overall income from the UK stock market to recover for several years.

Annual percentage growth
May 16 -
May 17
May 17 -
May 18
May 18 -
May 19
May 19 -
May 20
May 20 -
May 21
JPMorgan Elect PLC Managed Income 18.2% 7.6% -6.8% -12.8% 29.5%
FTSE All-Share 24.5% 6.9% -3.2% -9.9% 23.1%

Past performance is not a guide to the future. Source: Lipper IM to 31/05/2021.



Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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