REG - JPMorgan Amer InvTst - Annual Financial Report
03/04/2025 07:00
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RNS Number : 4305D JPMorgan American IT PLC 03 April 2025
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN AMERICAN INVESTMENT TRUST PLC
FINAL RESULTS FOR THE YEAR ENDED 31st DECEMBER 2024
Legal Entity Identifier: 549300QNAI4XRPEB4G65
Information disclosed in accordance with the DTR 4.1.3
JPMorgan American Investment Trust plc (the 'Company') announces its full year
results for the 12-months ended 31st December 2024.
Highlights:
· NAV total return of +30.6% compared with +27.0% for the S&P
500 Index (in Sterling terms) (the 'Benchmark'). Share price total return
+32.6%.
· Outperformance driven by stock selection in the large cap portion
of the portfolio, which represented 90% of the Company's assets, while gearing
was also additive.
· For five years cumulative ended 31st December 2024, NAV total
return of +132.4% compared with +105.9% for the Benchmark. Share price total
return +146.4%.
· Final dividend of 8.25p in respect of the year, taking the total
dividend to 11.00p, an increase of 41.9%.
· Ongoing charge of 0.35% for the year, down from 0.38% reflecting
the management fee structure, with assets over £1 billion charged at 0.25%.
· Buybacks of 4.9 million shares at a cost of £48 million and an
average discount of 3.6%, while 1.4 million shares were issued at a premium to
NAV, raising £14 million.
The Chairman, Robert Talbut, commented:
"The full impact of the new administration's policies has not yet emerged, but
it is starting to create some uncertainties for companies, which in turn may
not be entirely equity market friendly. However, the US economy still appears
to be on a sound footing, with the potential of further interest rate declines
over 2025 if inflation trends support this. In addition, corporate earnings
are projected to grow strongly, and therefore overall, the Board shares the
Manager's optimism regarding the outlook for US equities over the medium term.
The Company's long-term performance track record attests to the Manager's
ability to identify and capitalise on the most attractive investment
opportunities, regardless of the prevailing investment climate. We expect this
skill to continue manifesting itself in ongoing capital growth and
outperformance for shareholders over coming years."
The Portfolio Managers, Felise Agranoff, Jack Caffrey, Eric Ghernati, and
Graham Spence, commented:
"While we are encouraged by signs of improving growth prospects, we remain
vigilant regarding potential risks that could induce volatility. These include
ongoing geopolitical tensions and upcoming shifts in US trade, regulatory and
fiscal policies. It is also possible that bond yields will have to rise to
attract the funds needed to finance government debt. Any of these factors
could trigger short-term market fluctuations.
We are committed to investing in high-quality businesses with strong
competitive advantages, ensuring stability during uncertain times.
Additionally, we aim to capitalise on market volatility by selectively
identifying and seizing opportunities that align with our long-term investment
goals. Overall, our strategy is to maintain a balanced approach, leveraging
our insights and expertise to navigate the complexities of the market, while
actively seeking opportunities for growth and value creation. We are confident
this approach will continue to reward shareholders with strong capital growth
over time."
CHAIR'S STATEMENT
The US stock market made significant gains in 2024, with the S&P 500 Index
achieving impressive returns. Despite some concerns about a slowdown, the jobs
market remained strong, and declining inflation allowed the Federal Reserve to
begin cutting interest rates. The result of the US Presidential election gave
the market a further boost near the end of 2024, on expectations that the new
administration's range of economic policy proposals will support US growth.
The Company's net asset value (NAV), with debt at fair value, increased by
30.6% on a total return basis in 2024 in sterling terms, ahead of its
benchmark, the S&P 500, which increased by 27.0% on the same basis. During
the year, the share price traded between a discount of 5.8% and a premium of
4.1% compared to NAV.
These very satisfying annual returns extend the Company's long-term track
record of strong outright gains and benchmark outperformance. Since the
Company changed its investment approach on 1st June 2019, it has outperformed
the benchmark index by 22.4% in the subsequent 69 months through to the end of
February 2025, providing a NAV total return, with debt at fair value, of
156.7%, compared with a benchmark return of 134.3%. This represents an
annualised outperformance of 1.9 percentage points since the change in
investment approach.
In addition, in recognition of the strong relative returns that have been
delivered, I am pleased to report that the Company won the Citywire Investment
Trust Award in the 'Best North American Equities' category.
The Portfolio
At the end of the review period, 94.1% of your Company's portfolio assets were
invested in US large cap stocks, in a high conviction portfolio of some 40
stocks. This represents a carefully curated selection of the Manager's best
growth and value investment ideas. The proportions of growth and value
weightings can vary between 60% and 40% in either direction and stood at 55%
in growth stocks and 45% in value names at the period end. The overall
allocation to the small cap portfolio was 5.9% at the end of the review
period.
More details about performance attribution and portfolio activity during the
year can be found in the Investment Manager's report in the full Annual Report
of the Company, along with their view on the outlook for US equity markets.
Gearing
The Company is able to deploy gearing, which over time is expected to enhance
performance provided the cost of the gearing is less than the performance
delivered by the Company's equity portfolio.
The Board believes it is prudent for the Company's gearing capacity to be
funded from a mix of sources, including short- and longer-term tenors and
fixed and floating rate borrowings. The Company's gearing strategy is thus
implemented via the use of two forms of debt, including an £80 million
revolving credit facility (with an additional £20 million accordion) provided
by Mizuho Bank Ltd, which matures in August 2025. Whilst the facility was
undrawn at year-end, at the time of writing this report, US$40 million was
drawn. Alongside this bank facility, the Company has in issue a combined
US$100 million of unsecured loan notes issued via private placements; US$65
million of which is repayable in February 2031 and carries a fixed interest
rate of 2.55% per annum; and US$35 million of which matures in October 2032
and carries a fixed interest rate of 2.32%.
The Board has set the current tactical level of gearing at 5%, with a
permitted range around this level of plus or minus 5%, meaning that currently
gearing can vary between 0% and 10%. This tactical level of gearing remained
unchanged throughout the year. The Company ended the year with gearing
equivalent to 2.8% of net assets.
At the time of writing the gearing level of the Company was 5.2%, calculated
in line with the Association of Investment Companies ('AIC') methodology. The
Board continues to review the appropriate gearing level on a regular basis.
Board Review of the Manager
As in prior years, the Board visited the Manager's offices in New York and
held meetings with the portfolio managers and the analyst teams. The Board
also met with JPMorgan's senior management team to discuss the performance of
the portfolio, the Company's strategy and to review broader aspects of the
Manager's service.
The Manager provides other services to the Company, including accounting,
company secretarial and marketing services. These have been formally assessed
through the annual manager evaluation process.
Taking all factors into account, the Board concluded that the ongoing
appointment of the Manager is in the continuing interests of shareholders.
Investment Manager succession
As previously announced, Jonathan Simon retired as the portfolio manager
responsible for value stocks in the Company's large cap portfolio on 3rd March
2025. I would like to thank Jonathan for the significant contribution he has
made to the success of the Company during his tenure and wish him a happy and
well-deserved retirement.
Also as previously announced, Jack Caffrey, who has 23 years' experience with
the Manager, was appointed as a Portfolio Manager with effect from 7th August
2024, working on the value stocks in the portfolio, initially alongside
Jonathan. With effect from 4th March 2025, Graham Spence, who had worked with
Jonathan for some considerable time, was appointed as a Co-Portfolio Manager
to support Jack Caffrey. Graham is a senior member of the U.S. Equity Value
team with 12 years' experience with the Manager and is a co-portfolio manager
on the JPMorgan Value Advantage Fund within the U.S. Equity Group. The growth
stocks in the large cap portfolio continue to be managed by Felise Agranoff
supported by Co-Portfolio Manager Eric Ghernati. The Board believes in the
merit of additional portfolio manager resources and considers that the Company
will benefit from four portfolio managers (two value-focussed and two
growth-focussed) on the large cap portfolio as a key element of the Company's
ongoing support from the Investment Manager. There will be no changes to the
Company's investment process or investment objective as a result of these
changes.
Ongoing Charges
The Board continues to closely monitor the Company's cost base. The Company's
Ongoing Charges Ratio ('OCR') for the year under review was 0.35% (2023:
0.38%). The decrease over the year is primarily attributable to the growth in
the Company's assets and its highly competitive management fee structure, with
net assets over £1 billion being charged at just 0.25%. The Company remains
one of the most competitively priced US actively managed funds available to UK
investors, in either closed-ended or open-ended form.
Share Price and Premium/Discount
The Company's shares traded near NAV or at a premium at the start of the year,
then at a discount to its NAV during the second half, before returning to
premium territory at year end. Consistent with our statements made in previous
years, and because share buy-backs at a discount to NAV enhance the NAV for
remaining shareholders, the Board is prepared to buy back shares when they
stand at anything more than a small discount. The Board is also prepared to
issue shares at a premium to NAV. This undertaking has operated for several
years and applies in normal market conditions.
During the year 4,862,262 shares were purchased into Treasury, at a cost of
£48 million, representing 2.7% of the Company's issued share capital
(excluding shares held in Treasury) at the beginning of 2024. The average
discount to NAV at which these shares were purchased was 3.6%. During the
year, the Company also issued 1,355,000 shares at an average premium of 0.9%
to NAV, generating proceeds of £14 million.
Since the year end, the Company has been able to issue a further 1,414,046
shares from Treasury at a premium to NAV and 950,499 shares were purchased
into Treasury.
In line with usual practice, the Company will ask shareholders to approve the
repurchase of up to 14.99% of its capital at a discount to estimated NAV at
the forthcoming Annual General Meeting. The Company will also be seeking
shareholder permission to issue shares, where the Board is confident of
consistent market demand. The authority, if approved, will allow the Company
to issue up to 10% of its issued share capital from Treasury. The Company will
only issue shares at a price above the estimated NAV, including income and
with the value of the debt at fair value.
Dividends
Whilst capital growth is the primary aim of the Company, the Board understands
that dividend receipts can be an important element of shareholder returns. As
such, the Board has sought to enhance shareholder returns with a progressive
dividend policy.
The Company paid an interim dividend of 2.75p in respect of the first six
months of the 2024 financial year (FY24) on 7th October 2024, a 10% increase
on the 2.5 pence per share interim dividend paid every year since 2018.
Subject to shareholder approval at the AGM, a final dividend of 8.25p will be
paid on 30th May 2025 to shareholders on the register on 22nd April 2025,
making a total dividend of 11.00p per share for FY24. The Board is pleased to
report that this represents an increase of 41.9% on last year's total dividend
of 7.75p per share.
After the payment of the proposed final dividend, the balance in the revenue
reserves will be £21.5 million, equivalent to 12.0p per share (2023: 12.0p
per share) or 1.1 times (2023: 1.6 times) the current dividend. The Company's
prudent approach of building up revenue reserves in prior years provides it
with a means of supporting current and future dividend levels, should earnings
per share drop materially in any financial year.
The Board continues to monitor the net income position of the Company and,
based on current estimated dividend receipts for the year ahead, the Board
aims to continue its progressive dividend policy in the forthcoming year.
Portfolio Company Engagement
As detailed in the Manager's Investment Process contained in the full Annual
Report, extensive engagement with company management teams is a vitally
important element of stock selection. Company engagement is led by the
Portfolio Managers and analysts with the intention of gaining a full insight
into the attractiveness of a company. This will incorporate a deep
understanding of the company's current health, strategic direction, competitor
landscape and future prospects of the business. In addition, focus will be
placed upon assessing how various financially material ESG factors may affect
the risk profile of the business.
The Board shares the Investment Manager's view of the importance of this
combined approach to company engagement as a central component of the
investment process in seeking to deliver attractive risk-adjusted returns for
shareholders.
The Board
As announced previously, at the end of the Company's Annual General Meeting
('AGM') held in May 2024, Dr Kevin Carter retired as Chair, after serving the
Company for almost ten years, and I assumed the role of Chair.
Mr Colin Moore joined the Board on 1st February 2024 and Ms Pui Kei Yuen
became the Chair of the Risk Committee following my appointment as Chair of
the Board.
The Board continues to carefully manage its succession planning. Looking
ahead, the Company's Senior Independent Director, Ms Nadia Manzoor and I
would, in the normal course, step down from the Board after nine years'
service in 2025 and 2026 respectively. However, the Board is very mindful of
the changes in the portfolio manager line-up in the last 18 months and also
the refreshing of the Board itself, and therefore after consultation with our
largest shareholders, in order to ensure ongoing Board continuity through this
period the Board believes that it is in the Company's best interests that
Ms Manzoor should instead retire at the 2026 AGM, and I will retire the year
after. The Board will begin the recruitment process for a new Non-Executive
Director in the second half of this financial year, with the intention that
the appointee will be in place for several months before Ms Manzoor's
departure.
The results of the past year's externally facilitated Board evaluation
process, conducted by Lintstock, an independent advisor on board governance
practices, confirmed that Directors possess the experience and attributes to
support a recommendation to shareholders that they seek re-appointment at the
Company's forthcoming AGM. In line with the AIC Code of Corporate Governance,
additional statements to support the re-appointment of each Director are
included in the full Annual Report.
Shareholder Engagement
The Board believes that insight gained from shareholder interactions are very
helpful in assisting it with the management of the Company's affairs and, as
opportunities arise, Board members welcome and seek such meetings.
During the past year, the Manager held meetings and regular calls with
shareholders, including webinars, and provided portfolio and market updates on
the Company's website. Such activity is an essential part of building
understanding and confidence in the Manager's process and with the Board's
support, they will look to build upon these in the future.
Following the transfer of the management of the Company's share register from
Equiniti Financial Services Limited to Computershare Investor Services PLC
('Computershare'), with effect from 24th June 2024, a notification letter
from Computershare was sent to all registered shareholders advising of this
change. The letter included an invitation to shareholders to create an online
account which provides access to the details of their shareholdings and an
opportunity to participate in the Company's Dividend Reinvestment Plan (DRIP).
Please visit www.investorcentre.co.uk. for further information.
Annual General Meeting
This year's AGM will be held on Wednesday, 14th May 2025 at 2.30 p.m. at 60
Victoria Embankment, London EC4Y 0JP. Apart from the formal business of the
meeting, shareholders will have the opportunity to hear from two of our
portfolio managers, Felise Agranoff and Jack Caffrey, who will make a
presentation by video, to be followed by a question-and-answer session.
Shareholders are invited to attend the meeting and raise any questions they
have, either at the meeting, or in advance, by writing to the Company
Secretary at the address in the full Annual Report, or via email to
jpmam.investment.trusts@jpmorgan.com. As is normal practice for the Company,
all voting on the resolutions will be conducted on a poll. The Board strongly
encourages all shareholders to exercise their votes by completing and
returning their proxy forms in accordance with the notes to the Notice of
Meeting in the full Annual Report.
For shareholders who wish to follow the AGM proceedings, but cannot attend in
person, we will be able to offer participation via video conferencing
facilities. Details on how to register, together with access details, can be
found on the Company's website: www.jpmamerican.co.uk. Shareholders viewing
the meeting via conferencing software will not be able to vote in the poll and
we therefore especially encourage those shareholders who cannot attend in
person, to exercise their votes in advance of the meeting by completing and
submitting their form of proxy. Shareholders are also encouraged to send any
questions to the Board, via the Company Secretary, at the email address above,
ahead of the AGM. We will endeavour to answer all relevant questions at the
meeting, or via the website, depending on arrangements in place at the time.
If there are any changes to the arrangements for the Annual General Meeting,
the Company will update shareholders through the Company's website and, if
appropriate, through an announcement to the London Stock Exchange.
Stay Informed
The Company delivers email updates with regular news and views, as well as the
latest performance. If you have not already signed up to receive these
communications and you wish to do so, you can opt in via
https://web.gim.jpmorgan.com/emea_investment_trust_subscription/welcome?targetFund=JAM
or by scanning the QR code that is in the Annual Report.
Outlook
With at least some of the immediate political uncertainties related to the US
Presidential election process now behind us, the early months of the new
administration saw US equity markets in a buoyant mood, despite some caution
about the predictability of the new administration's policies, especially in
relation to trade and international relations. More recently US financial
markets are trying to absorb the implications of the barrage of policy
initiatives launched by the new administration. The full impact of all the new
policies has not yet emerged, but it is starting to create some uncertainties
for companies, which in turn may not be entirely equity market friendly.
However, as my predecessor noted in his statement last year, the US economy
still appears to be on a sound footing, with the potential of further
interest rate declines over 2025 if inflation trends support this. In
addition, corporate earnings are projected to grow strongly, and therefore
overall, the Board shares the Manager's optimism regarding the outlook for US
equities over the medium term.
The Directors continue to have confidence in the Manager's investment strategy
and process. The Company's long-term performance track record attests to the
Manager's ability to identify and capitalise on the most attractive investment
opportunities, regardless of the prevailing investment climate. We expect this
skill to continue manifesting itself in ongoing capital growth and
outperformance for shareholders over coming years.
Thank you for your continued support.
Robert Talbut
Chair
2nd April 2025
INVESTMENT MANAGER'S REPORT
Market Review
The past year was another robust one for the US economy and financial markets.
The S&P 500 Index achieved a second year of double-digit returns, posting
an impressive rise of 25% in US dollars terms and 27% in sterling. This
remarkable growth was underpinned by resilient consumer spending, marking the
fourth consecutive year of above-trend economic expansion.
US equity markets began 2024 on a strong note, fuelled by optimism surrounding
a 'soft landing' for the economy. Initially economists projected modest growth
of only 1.2% for the year. However GDP grew by 2.8% in 2024, after expanding
by 2.9% and 2.5% in the prior two years. Consumption, which constitutes 68% of
nominal GDP, has been especially resilient. Real consumer spending on goods
has risen by 2% year-on-year, and spending on durable goods and services has
increased by 3%.
Throughout the year, the jobs market and interest rates remained central
topics of discussion. Despite some concerns about an economic slowdown,
employment continued to rise with December 2024 marking the 48th consecutive
month of job gains, and the unemployment rate concluded the year at 4.1%, only
slightly higher than the 3.8% rate at which it began the year. Although it may
seem counterintuitive that both figures increased, the strong labour market
has attracted more individuals back into the workforce, as reflected in the
rise in the employment participation rate. Inflation made significant progress
toward the Federal Reserve's 2% target, which gave the Fed scope to begin
lowering interest rates. Fed policy has been targeting inflation since March
2022, when it began increasing rates to slow the economy. In August 2023, the
benchmark Fed funds rate reached a 23 year high. As inflation moderated, the
central bank cut rates by 0.5 percentage points in September 2024, followed by
two additional cuts, each of 0.25 percentage points. By year end, the Fed
funds rate stood in a range of 4.25% to 4.5%.
The largest contribution to the market's return was US corporate earnings
which again surpassed expectations. Forecasts for 2024 rose steadily due to
the supportive macroeconomic environment. Current projections indicate
expected earnings growth of 12% year-over-year for 2024, notably higher than
the ten-year average growth rate of 8%.
Much like in 2023, the 'Magnificent 7' tech giants-Apple, Microsoft, Amazon,
Alphabet, NVIDIA, Meta Platforms, and Tesla-also played a crucial role in the
S&P 500's performance. These companies accounted for 61% of the index's
return in 2024. However, their dominance slightly diminished as economic
momentum contributed to a broadening of earnings expectations, a trend
expected to continue in 2025.
Once again, the best-performing sectors of the S&P 500 were communication
services, technology, and consumer discretionary. Financials also surprised
with a robust performance, driven by expectations of a strong recovery in
earnings and a more favourable regulatory environment. Conversely, the weakest
sectors were materials, healthcare, and real estate.
However, it is important to note that while the overall market performed well,
there were pockets of volatility. Geopolitical tensions and policy
uncertainties occasionally spooked investors, leading to short-term market
fluctuations. Despite these challenges, the underlying fundamentals remained
strong, providing a solid foundation for continued growth.
The charts contained in the Annual Report provide an overview of the returns
of different investment styles in the US market during 2024, as well as the
sector performance of the S&P 500 during that period.
2024 US Equities Style performance (US$)
2024 Value Blend Growth
Large 14.4% 25.0% 33.4%
Mid 13.1% 15.3% 22.1%
Small 8.1% 11.5% 15.2%
2024 S&P 500 Index performance (US$)
Refer to the chart in the full Annual Report.
Performance and Overall Asset Allocation
The Company's net asset value rose 30.6% on a sterling total return basis in
2024, significantly outpacing the 27.0% return of the S&P 500 Index. This
result means that 2024 was the fifth year in the past six that the Company has
delivered double digit returns, and 2024 saw the best absolute return over
that period.
The large cap portion of the portfolio, which, at over 90% of the Company's
assets, is its biggest allocation, added the most value over the period.
Gearing was also additive given the market's rally. The Company's small cap
allocation, which averaged approximately 6% over the period, detracted from
relative returns, as small cap stocks lagged the S&P 500.
Performance attribution
For the year ended 31st December 2024
% %
Contributions to total returns
Net asset value (debt at fair value) total return
in sterling terms (APM) 30.6
Benchmark total return (in sterling terms) 27.0
Excess return 3.6
Combined Portfolio return in US dollar terms(1) 28.8
Benchmark total return in US dollar terms 24.8
Combined Portfolio relative return in US dollar terms 4.0
Large & Small Cap Portfolio contribution(2):
Large Cap Portfolio in US dollar terms 4.9
Small Cap Portfolio in US dollar terms (0.9)
Combined Portfolio relative return in US dollar terms 4.0
Contributions to return
Equity portfolio (ex-cash and gearing) in US dollar terms 3.0
Cash and gearing impact in US dollar terms(3) 1.0
Combined Portfolio relative return in US dollar terms 4.0
Effect of foreign currency translation(4) 0.1
Combined Portfolio relative return in sterling terms 4.1 4.1
Management fee and other expenses(5) (0.4)
Finance costs(5) (0.1)
Share buybacks and share issuances(6) 0.1
Impact of fair valuation of debt(7) (0.1)
Total 3.6
Source: J.P. Morgan/Morningstar.
All figures are on a total return basis. Performance attribution analyses how
the Company achieved its recorded performance relative to its benchmark.
(1) The aggregated returns of both the Large Cap and
Small Cap portfolios.
(2) The split of returns by portfolio, relative to the
benchmark. This has been calculated using the average weighting of the Large
Cap and Small Cap portfolios over the year.
(3) Cash and gearing - measures the impact on returns of
the principle amount of borrowings or cash balances on the Company's relative
performance.
(4) Effect of foreign currency translation - measures
the impact of currency exposure differences between the Company's portfolio
and its benchmark.
(5) Management fee, other expenses and finance costs -
the payment of fees, expenses and finance costs (interest paid on borrowings)
reduces the level of total assets, and therefore has a negative effect on
relative performance.
(6) Share buybacks and issuances - measures the combined
effect of (i) the enhancement to net asset value per share of buying back the
Company's shares for cancellation at a price which is less than the Company's
net asset value per share and (ii) the shares issued at a price higher
(premium) than the net asset value per share, would result in an enhancement
to net asset value per share.
(7) The impact of fair valuation includes the effect of
valuing the combined US$100m private placements at fair value.
(APM) Alternative Performance Measure ('APM').
Large Cap Portfolio
The outperformance by the large company portion of the portfolio over the
review period was mainly driven by good stock selection.
Kinder Morgan, one of the largest energy infrastructure companies in the US,
was a strong stock-specific contributor. The company's earnings growth was
bolstered by increased demand for natural gas, including liquefied natural gas
(LNG) exports, and strong overall demand for energy, especially from data
centres. Additionally, Kinder Morgan maintained a robust project pipeline,
further enhancing its growth prospects. We remain confident in this stock, due
to the company's stable earnings from natural gas volumes rather than price.
Our overweight position in Broadcom, a leading semiconductor company, proved
highly beneficial, as its share price surged over 100% during the period. The
company experienced robust growth, fuelled by the strong appetite for
artificial intelligence (AI) related products and the successful integration
of VMware, a software provider which helps companies operate using a mix of
computer environments. Broadcom's semiconductor revenue reached US$12.2
billion in the 2024 fiscal year, and there is potential for significant
further growth, as it is projecting the serviceable addressable market (SAM)
for its AI semiconductors to be US$60-90 billion by fiscal 2027, with key
customers including Google, Meta, and ByteDance. Despite facing some
challenges in non-AI segments, Broadcom's overall financial performance
remained strong, with notable improvements in operating margins and annualised
booking values.
Another top contributor was Meta Platforms (formerly Facebook), which is
experiencing strong momentum driven by advances in AI and its Reality Labs
segment, which provides augmented and virtual reality related products,
including consumer hardware, software, and content. Meta AI has rapidly gained
traction, with over 500 million monthly active users. Enhancements in
AI-driven feed and video recommendations have boosted user engagement on
Facebook and Instagram. Within the Reality Labs segment, Meta has successfully
launched Ray-Ban Meta glasses and is developing Orion augmented reality (AR)
glasses, which are expected to be available in two to three years. The company
is focusing on long-term opportunities, including in AI, virtual reality, and
new product initiatives such as click-to-messaging ads and Reels, an advanced
video production tool, with the aim of maintaining its industry leadership and
exploring new revenue growth opportunities.
The most significant stock-specific detractor from the portfolio's performance
relative to the S&P 500 was our lack of exposure to Tesla. Although we
have previously held Tesla in our portfolio, we decided to sell the stock in
January 2024, due to concerns about increased competition from Chinese and
European players. As the year progressed, Tesla's share price was supported by
improvements in its profitability, which were driven by cost reductions and
enhanced production efficiency, and announced plans for a more affordable EV
model. Despite these positive developments, we are concerned about the
potential for new vehicle models to cannibalise sales of the Model 3 and Model
Y lines. Furthermore, we see challenges related to the full self-driving (FSD)
technology, as well as from increased competition and economic pressures, all
of which have the potential to adversely affect Tesla's profitability. These
considerations have led us to remain on the sidelines for now.
Our position in Regeneron Pharmaceuticals also detracted from performance
during 2024, as its stock price declined due to competitive pressures and
legal challenges. The company reported strong revenue and earnings growth,
driven by the successful launch of Eylea HD, a treatment for macular
degeneration, and the robust performance of Dupixent, which relieves the
symptoms of eczema and asthma. However, there are concerns about Eylea's
competitive positioning, particularly with the potential entry of Amgen's
biosimilar medication, an innovative, alternative treatment for macular
degeneration. The company also faces legal issues related to the False Claims
Act. Both of these concerns have negatively impacted the stock. Despite the
current headwinds, Regeneron remains a compelling investment opportunity with
long-term growth prospects, due to its significant research and development
investments in oncology, immunology, and obesity, along with its robust
pipeline.
Weyerhaeuser, one of the world's largest holders of timberlands, was another
significant detractor. The company's stock price came under pressure due to
declining sales, which were driven by lower harvest volumes and increased
processing costs. The company faced significant challenges from high input
costs and sector-wide underperformance, exacerbated by the impact of higher
mortgage rates on housing activity. Additionally, regulatory scrutiny and
shifting market dynamics in the wood products industry contributed to
uncertainty, negatively impacting investor sentiment and stock performance.
Following the sale of our position in May, the stock continued to decline,
reflecting the ongoing difficulties faced by the company and the broader
industry.
Large Cap Portfolio Stock Attribution(1)
For the year ended 31st December 2024
Relative weight Stock return Impact
Top Contributors (%) (%) (%)
Kinder Morgan 3.4 64.4 1.1
Broadcom 1.9 110.4 0.8
Meta Platforms 2.2 66.1 0.8
Trane Technologies 2.3 53.0 0.5
Morgan Stanley 1.9 47.9 0.5
Relative weight Stock return Impact
Top Detractors (%) (%) (%)
Tesla* -2.3 24.6 -1.1
Regeneron Pharmaceuticals 1.3 -18.9 -0.9
Weyerhaeuser* -0.1 -9.6 -0.7
EOG Resources 2.5 4.3 -0.6
Public Storage 1.9 2.1 -0.5
Source: Wilshire, Excludes Cash & Gearing (USD).
(1) The attribution summary approximates the gross excess returns of
the portfolio and is calculated based on daily holdings which does not
represent actual trading, liquidity constraints, fee schedules and transaction
costs. It is shown for illustrative purposes only and is not meant to be
representative of actual results.
* Indicates stock was not held as of 31st December 2024. 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. Past performance is not a reliable indicator of current and
future results.
Portfolio Activity
During the year, we had several opportunities to acquire attractively valued
companies at more reasonable prices. As always, we remain very selective, only
adding names with differentiated and compelling fundamentals. We purchased
eleven new names and exited the same number over the year - the same as in
2023.
During the year, we made some changes in our consumer exposure, adding
discount retail apparel and home accessories store TJX Companies and fast-food
retailer McDonald's. TJX has been a winner in the retail world, gaining market
share as traditional department stores struggle and shoppers become more price
sensitive. The company appeals to a wide range of customers, including those
with higher incomes and younger shoppers, thanks to its great mix of
merchandise. Known for superior execution, TJX has a skilled management team
and a global network of suppliers. This allows it to offer popular brand-name
products at great prices. TJX's flexible off-price business model means it can
quickly adapt to new trends. The company also has a strong history of beating
expectations and raising forecasts. Given its market share growth, attractive
value offerings, operational excellence, and experienced leadership, TJX is
truly a standout in the retail sector. Typically, the stock trades at a very
high valuation, however its multiple compressed in the second quarter on
concerns about a weaker outlook. We used this as an opportunity to trade up
from a quality perspective, as we funded the acquisition of TJX via the
disposal of our position in Ross Stores.
McDonald's franchise model minimises direct cost exposure, while maximising
royalty income. This allows the company to generate stable revenue streams
with a higher return on invested capital. Despite pricing challenges
immediately after the pandemic, the company has since improved its
US performance through effective value messaging and app promotions, such as
the $5 meal deal. These initiatives have resonated with consumers, driving
increased traffic and sales. The company is looking to accelerate global unit
growth, and the current management team has demonstrated an ability to adapt
to changing market dynamics and develop strategic initiatives. We believe the
company's focus on value, menu innovation, and digital capabilities positions
it well to deliver consistent returns over the long term.
To fund this purchase, we sold our position in United Parcel Services (UPS), a
logistics and package delivery company. Demand for its services has weakened
and revenue per package and profit margins have come under pressure as more
customers are opting for cheaper means of shipping. We lost confidence in the
company and perceived McDonald's to be a more attractive opportunity.
We exited healthcare concern AbbVie to fund our acquisition of Estee Lauder.
AbbVie's share price had rallied, and we felt it was prudent to exit the name,
as its valuation had become less attractive, and we felt Estee Lauder offered
a better risk/reward proposition.
One of the more recent portfolio adjustments has been the re-introduction of
Intuitive Surgical, the dominant leader in robotic surgery systems. This
company is seeing strong growth in procedures using its da Vinci surgical
system, and it has launched several new products. Intuitive Surgical has
experienced a significant jump in revenue, thanks also to higher selling
prices and fewer leased systems. Strong sales, combined with cost controls,
have resulted in strong margin growth. We believe the company is
well-positioned for long term success. The repurchase of Intuitive Surgical
was funded by our exit from Advanced Micro Devices, where we grew concerned
about the company's data centre growth prospects, as the competitive landscape
for graphics processing units (GPUs) is intensifying as well as the pace of AI
capex growth slowing.
Value and growth exposure
The large cap portfolio is divided between value and growth stocks, with the
allocation allowed to vary between 60:40 and 40:60. At the end of the review
period, growth stocks comprised some 55% of the large cap portfolio, with the
remaining 45% invested in value stocks. This is close to the current
growth/value split of the S&P 500 index.
Charts included in the full Annual Report.
Portfolio Holdings
Large Cap Portfolio
As at 31st December 2024
Charts included in the full Annual Report.
The table below shows that at the year end the large cap portfolio was trading
at a 20% discount to the market on a free cash flow basis, which confirms that
we are not paying a premium for good cash flow. Indeed, the discount provides
a comforting valuation cushion. The portfolio is expected to deliver earnings
growth of around 16% over the next 12 months, in line with the market.
However, both figures are based on consensus earnings, which may need to be
revised.
Characteristics Large Cap Portfolio S&P 500
Weighted Average Market Cap US$945.5bn US$1,034.9bn
Price/Earnings, 12-month forward(1) 22.7x 20.8x
Price/Free Cash Flow, last 12-months 21.7x 26.2x
EPS Growth, 12-month forward 15.6% 16.0%
Return on Equity, last 12-months 22.5% 24.7%
Predicted Beta 0.99 -
Predicted Tracking Error 2.77 -
Active Share 61% -
Number of holdings 40 500
Source: Factset, J.P. Morgan Asset Management.
(1) Including negatives. Data as of 31st December 2024. 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.
A Glossary of Terms is provided in the full Annual Report.
Small Cap Portfolio
As mentioned above, the small cap portfolio negatively impacted returns over
the review period, as it underperformed the S&P 500. The overall
allocation to the small cap portfolio was maintained at an average of 6%
during the year. Small cap valuations continue to look compelling relative to
large caps following a prolonged period during which large caps outperformed
small caps. Valuations may indicate the conditions are ripe for a potential
reversal, we feel caution is still warranted.
Outlook
We are upbeat about the prospects for US equities over the coming year and
beyond. The economy remains resilient, performing better than many had
expected, the unemployment rate remains relatively steady, and consumer
financial conditions are manageable and will be further supported by easing
inflation pressures and declining interest rates. This combination of factors
is fostering a stable economic environment, conducive to further growth.
Against this positive backdrop, our research analysts are optimistic about the
earnings outlook for the S&P 500, projecting a robust 12% growth in
earnings for 2025 and 14% for 2026. These strong forecasts underpin our
confidence in the market's potential.
While we are encouraged by signs of improving growth prospects, we remain
vigilant regarding potential risks that could induce volatility. These include
ongoing geopolitical tensions and upcoming shifts in US trade, regulatory and
fiscal policies. It is also possible that bond yields will have to rise to
attract the funds needed to finance government debt. Any of these factors
could trigger short-term market fluctuations.
We are committed to investing in high-quality businesses with strong
competitive advantages, ensuring stability during uncertain times.
Additionally, we aim to capitalise on market volatility by selectively
identifying and seizing opportunities that align with our long-term investment
goals. Overall, our strategy is to maintain a balanced approach, leveraging
our insights and expertise to navigate the complexities of the market, while
actively seeking opportunities for growth and value creation. We are confident
this approach will continue to reward shareholders with strong capital growth
over time.
Felise Agranoff
Jack Caffrey
Eric Ghernati
Graham Spence
Portfolio Managers
2(nd) April 2025
PRINCIPAL AND EMERGING RISKS
The Directors confirm that they have carried out a robust assessment of the
principal and emerging risks facing the Company, including those that could
threaten its business model, future performance, solvency or liquidity.
With the assistance of JPMF, the Risk Committee, chaired by Mr Robert Talbut
until May 2024 and thereafter by Ms Pui Kei Yuen, has drawn up a risk matrix,
which identifies the risks to the Company. These are reviewed and discussed on
a regular basis by the Board.
The AIC Code of Corporate Governance requires the Board (via the relevant
Committee) to put in place procedures to identify and manage emerging risks
facing the Company. At each Risk Committee meeting, the Board considers
whether any emerging risks, which it defines as potential trends, sudden
events or changing risks which are characterised by a high degree of
uncertainty in terms of occurrence probability and possible effects on the
Company, have arisen. Once identified, as the impact of emerging risks is
understood, they may be entered on the Company's risk matrix and mitigating
actions considered as necessary. Previously considered emerging risks have
either been removed from the risk matrix as they are no longer considered
potential risks to the Company or escalated to a principal risk. The Board's
recent review of its risks concluded that the emerging risk of a State-backed
Cyber Security Attack identified at the half year ending 30th June 2024 should
now be considered within the Operational Resilience, Controls and Security
principal risk. As previously stated at the half year ending 30th June 2024,
the Board concluded that the emerging risk of the Threat to Liberal
Democracies would thereafter be considered within the Geopolitical principal
risk. Whilst the Board has not identified any new emerging risks at the time
of publication of this report, it has noted the heightened level and evolving
nature of the Geopolitical risks facing the Company and is monitoring these
accordingly.
The key principal risks identified by the Board and the ways in which they are
managed or mitigated are summarised below.
Movement from
Principal risk Description Mitigating activities the prior year
Investment Strategy, Process and Performance
Investment Strategy and Process An inappropriate investment strategy, poor asset allocation or the level of The Board has delegated investment responsibilities to one of the best ã
gearing, may lead to underperformance against the Company's benchmark index resourced financial institutions globally and seeks to mitigate this risk
and its peer companies, resulting in the Company's shares trading on a wider through its investment policy and guidelines, which are monitored and reported
discount. on regularly by the Manager. The Board monitors the implementation and results
of the investment process with the Portfolio Managers and reviews data which
details the portfolio's holdings and risk profile. The Manager deploys the
Company's gearing within a range set by the Board. The Board holds a meeting
specifically on strategy annually.
Investment Team The departure of or failure to adequately replace one or more of the four The Manager has a depth of experienced investment resources and takes steps to ã
Portfolio Managers or several members of the wider investment management team reduce the consequences of such an event by ensuring appropriate succession
could result in a short-term deterioration in investment performance. planning and the adoption of a team-based approach, including the appointment
of four Portfolio Managers.
Market Risk Market risk arises from uncertainty about the future prices of the Company's Whilst the board has limited ability to mitigate the impact of market risk ã
investments. Examples of market risk are price volatility, liquidity, currency beyond the measures described above, the Board and Manager monitor and review
risk and interest rate risk. market risks and their potential impact on the Company and the investment
portfolio. These are risks that investors take having invested into a single
country fund.
Technological Change This risk is not confined to the technology sector. The use of technology is The Manager has extensive research resources focused on technology. The Board â
pervasive. Changes in technology may disrupt the business of investee receives regular updates from the Manager and other experts.
companies impacting their market value.
Rating Volatility and Corporate Activity Risk The shares trading at an excessive discount or premium to Net Asset Value can The Board monitors the Company's premium/discount level and is committed to â
negatively impact shareholders and, with the rise of activism, the Company buy back shares when they stand at anything more than a small discount, and
itself may be at risk of some form of corporate activity, which may not be in also to issue shares at a premium where the Board is confident of consistent
the best interests of all shareholders. In addition, low shareholder voting market demand, to enhance the NAV per share for remaining shareholders.
turnout at AGMs (and GMs) may lead to some form of corporate activity which Furthermore, the Board monitors changes to its shareholder register carefully
may not be in the best interests of all shareholders, or, the inability to and on a timely basis, and actively seeks to engage with its shareholders
execute corporate activity which may be in the best interests of shareholders. directly and in conjunction with the Manager and the Company's broker.
Integration of ESG Factors into the Investment Process The Company's policy on ESG and climate change may be out of line with The Board liaises with the Manager and other experts to regularly review the ä
investors' expectations and regulatory requirements and/or may impact policy and understand the implications of its integration into the process.
performance.
Regulatory, Compliance & Operational
Operational Resilience, Controls and Security The Company has no employees and is therefore dependent on third parties for The Company operates through contractual agreements with its service â
the provision of all of its services and systems, especially those of the providers, most of which the Manager is also party to. The Board's Audit
Manager, the Depositary and the Registrar. Failure to maintain effective and Committee regularly reviews the controls reports for the Manager, Depositary
appropriate controls, improper access, disruption to, failure of or inadequate and Registrar and monitors and evaluates the performance of the Company's
service levels of these parties could prevent accurate reporting and service providers, with the assistance of the Manager. Any pertinent issues
monitoring of the Company's financial position, loss of confidential data, relevant to the Company are reported to the Board. In addition, the Manager's
impact its ability to operate or result in reputational damage. Business Continuity Plans ('BCP') are designed to accommodate potential
threats and are regularly updated, tested, monitored and reviewed. The Manager
has assured the Board that the Company benefits directly or indirectly from
all elements of JPMorgan's Cyber Security programme.
Accounting, Legal and Regulatory A breach of regulatory rules or a failure to maintain accurate accounting Accounting, legal and regulatory compliance are continually monitored by the â
records could result in loss of investment trust status, reputational damage, Manager and the Auditors and the results reported to the Board. In addition,
financial penalties, suspension of the Company's listing or a qualified audit the Board, the Manager and its professional advisers monitor changes in
report. legislation which may have an impact on the Company.
Geopolitical and Other Exogenous Issues
There are numerous risks of this type. There is little direct control of this type of risk possible,
but it is important to monitor them.
Below are some examples.
Geopolitical There is an increasing risk to market stability and investment opportunities The Board monitors geopolitical risks in regular questioning of the Manager ã
from geopolitical conflicts (such as between Russia and the Ukraine, China and and external experts to assess the potential impact on the Company and the
Taiwan, China and the US and the turmoil in the Middle East), and rising investment portfolio. The Company seeks to mitigate these risks through its
unpredictable shifts in US tariff and regulatory policies making global trade investment policy and guidelines set by the Board, including the ability to
and international relations more challenging. In addition, there would appear operate across the Company's full gearing range when appropriate and through
to be a heightened threat to the orderly democratic process in the US and the implementation of an active buyback policy.
elsewhere. These factors could adversely affect the attractiveness and demand
for the Company as a single country fund.
Artificial Intelligence (AI) Advances in computing power mean that AI has become a powerful tool that will The Board monitors developments in this area carefully both in conjunction ã
impact a wide range of applications with potential to disrupt the Company's with the Manager and other external experts when appropriate and consider how
operations and investments. this risk might threaten the Company's activities.
Climate Change Climate change could present a material risk to the value of investee The Manager's investment process integrates considerations of environmental, ã
companies and the operations of the Company and its service providers. social and governance ('ESG') risk factors, including climate change, into its
approach to assess the potential impact on investee companies.
The Manager and the Company's key service providers incorporate consideration
of the impacts of climate change into their Business Continuity Plans
('BCP's').
Widespread Social and Economic Disruption Examples such as the Global Financial Crisis or the Covid-19 pandemic may have As described above, the Manager's Business Continuity Plans ('BCP') are ã
ended or abated, but disruption may reoccur for several reasons. regularly updated, tested and monitored, and the Manager conducts periodic due
diligence of the Company's key service providers, which includes a BCP review.
The Board also reviews reports on the Company's 'Going Concern' status in
stress test scenarios.
Legislative and Regulatory Change Changes in legislation may adversely affect the Company and/or the Manager The Board monitors changes to the regulatory, legislative and taxation ä
either directly or indirectly. framework within which it operates. In order to do this, the Board draws on
the expertise and advice of its professional advisers and the Manager.
TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
Details of the management contract are set out in the Directors' Report in the
full Annual Report. The management fee payable to the Manager for the year was
£5,205,000 (2023: £4,261,000) of which £nil (2023: £nil) was outstanding
at the year end.
Included in administration expenses in note 6 in the full Annual Report are
safe custody fees amounting to £17,000 (2023: £15,000) payable JPMorgan
Chase Bank N.A. of which £3,000 (2023: £5,000) was outstanding at the year
end.
Handling charges on dealing transactions amounting to £13,000 (2023:
£12,000) were payable to JPMorgan Chase Bank N.A during the year of which
£2,000 (2023: £5,000) was outstanding at the year end.
The Company also invests in the JPMorgan USD Liquidity Fund, a money market
fund which is managed by JPMorgan Asset Management (Europe) S.à r.l. At the
year end this was valued at £24.9 million (2023: £33.9 million). Income
amounting to £1,348,000 (2023: £1,648,000) was receivable during the year of
which £nil (2023: £nil) was outstanding at the year end.
At the year end, total cash of £112,000 (2023: £280,000) was held with
JPMorgan Chase Bank N.A. The net amount of interest of £4,000 (2023: £6,000)
was receivable by the Company during the year from JPMorgan Chase of which
£nil (2023: £nil) was outstanding at the year end.
Full details of Directors' remuneration can be found in the Annual Report.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report & Financial
Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare the Annual Report &
Financial Statements for each financial year. Under that law, the Directors
have elected to prepare the financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting
Standards and applicable law). Under company law the Directors must not
approve the Financial Statements unless they are satisfied that, taken as a
whole, the Annual Report & Financial Statements are fair, balanced and
understandable, provide the information necessary for shareholders to assess
the Company's position, performance, business model and strategy and that they
give a true and fair view of the state of affairs of the Company and of the
total return or loss of the Company for that period. In order to provide these
confirmations, and in preparing these financial statements, the Directors are
required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are reasonable
and prudent;
• state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and explained in the
financial statements; and
• prepare the financial statements on a going concern basis
unless it is inappropriate to presume that the Company will continue in
business
and the Directors confirm that they have done so.
The Directors are responsible for keeping proper accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and to
enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The accounts are published on the www.jpmamerican.co.uk website, which is
maintained by the Company's Manager. The maintenance and integrity of the
website maintained by the Manager is, so far as it relates to the Company, the
responsibility of the Manager. The work carried out by the Auditor does not
involve consideration of the maintenance and integrity of this website and,
accordingly, the Auditor accepts no responsibility for any changes that have
occurred to the accounts since they were initially presented on the website.
The accounts are prepared in accordance with UK legislation, which may differ
from legislation in other jurisdictions.
Under applicable law and regulations the Directors are also responsible for
preparing a Directors' Report, Strategic Report, Statement of Corporate
Governance and Directors' Remuneration Report that comply with that law and
those regulations.
Each of the Directors, whose names and functions are listed in the full Annual
Report, confirms that, to the best of their knowledge:
• the financial statements, which have been prepared in
accordance with United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law), give a true and fair view of
the assets, liabilities, financial position and return or loss of the Company;
and
• the Strategic Report includes a fair review of the
development and performance of the business and the position of the Company,
together with a description of the principal risks and uncertainties that it
faces.
The Board confirms that it is satisfied that the Annual Report & Financial
Statements taken as a whole are fair, balanced and understandable and provide
the information necessary for shareholders to assess the strategy and business
model of the Company.
The Board also confirms that it is satisfied that the Strategic Report and
Directors' Report include a fair review of the development and performance of
the business, and the position of the Company, together with a description of
the principal risks and uncertainties that the Company faces.
For and on behalf of the Board
Robert Talbut
Chair
2(nd) April 2025
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31st December 2024
2024 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments held at fair value through
profit or loss - 459,406 459,406 - 304,636 304,636
Net foreign currency (losses)/gains - (743) (743) - 5,078 5,078
Income from investments 23,579 55 23,634 16,519 1,214 17,733
Interest receivable 1,352 - 1,352 1,654 - 1,654
Gross return 24,931 458,718 483,649 18,173 310,928 329,101
Management fee (1,041) (4,164) (5,205) (852) (3,409) (4,261)
Other administrative expenses (1,139) - (1,139) (1,053) - (1,053)
Net return before finance costs and taxation 22,751 454,554 477,305 16,268 307,519 323,787
Finance costs (494) (1,970) (2,464) (627) (2,506) (3,133)
Net return before taxation 22,257 452,584 474,841 15,641 305,013 320,654
Taxation charge (3,024) - (3,024) (1,429) (909) (2,338)
Net return after taxation 19,233 452,584 471,817 14,212 304,104 318,316
Return per share 10.59p 249.22p 259.81p 7.73p 165.41p 173.14p
The dividends payable in respect of the year ended 31st December 2024 amount
to 11.00p (2023: 7.75p) per share, costing £19,778,000 (2023: £14,152,000).
Details of dividends paid and proposed are given in note 10 of the full Annual
Report.
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the year.
The 'Total' column of this statement is the profit and loss account of the
Company and the 'Revenue' and 'Capital' columns represent supplementary
information prepared under guidance issued by the Association of Investment
Companies.
The net return after taxation represents the profit for the year and also the
total comprehensive income.
STATEMENT OF CHANGES IN EQUITY
Called up Capital
share Share redemption Capital Revenue
capital premium reserve reserves reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
At 31st December 2022 14,082 151,850 8,151 1,099,333 30,667 1,304,083
Repurchase of shares into Treasury - - - (45,108) - (45,108)
Net return after taxation - - - 304,104 14,212 318,316
Dividends paid in the year (note 2) - - - - (13,292) (13,292)
At 31st December 2023 14,082 151,850 8,151 1,358,329 31,587 1,563,999
Repurchase of shares into Treasury - - - (48,069) - (48,069)
Issue of shares from Treasury - 7,971 - 5,922 - 13,893
Proceeds from share forfeiture(1) - - - 731 - 731
Proceeds from forfeiture of unclaimed dividends(1) (note 2) - - - - 71 71
Net return after taxation - - - 452,584 19,233 471,817
Dividends paid in the year (note 2) - - - - (14,597) (14,597)
At 31st December 2024 14,082 159,821 8,151 1,769,497 36,294 1,987,845
(1) During the period, the Company undertook an Asset Reunification
Program to reunite inactive shareholders with their shares and unclaimed
dividends. In accordance with the Company's Articles of Association, the
Company exercised its right to forfeit the shares belonging to untraced
shareholders for a period of 12 years or more. These shares were sold in the
open market and the net proceeds returned to the Company. In addition, any
unclaimed dividends older than 12 years from the date of payment of such
dividend were forfeited and returned to the Company.
STATEMENT OF FINANCIAL POSITION
At 31st December 2024
2024 2023
£'000 £'000
Fixed assets
Investments held at fair value through profit or loss 2,042,755 1,608,263
Current assets
Debtors 600 789
Current asset investments(1) 24,926 33,927
Cash at bank(1) 112 280
25,638 34,996
Current liabilities
Creditors: amounts falling due within one year (971) (1,121)
Net current assets 24,667 33,875
Total assets less current liabilities 2,067,422 1,642,138
Creditors: amounts falling due after more than one year (79,577) (78,139)
Net assets 1,987,845 1,563,999
Capital and reserves
Called up share capital 14,082 14,082
Share premium 159,821 151,850
Capital redemption reserve 8,151 8,151
Capital reserves 1,769,497 1,358,329
Revenue reserve 36,294 31,587
Total shareholders' funds 1,987,845 1,563,999
Net asset value per share - debt at par 1,109.9p 856.5p
(1) For the year ending 31st December 2023, the 'Cash and cash equivalents'
line item in the Statement of Financial Position has been revised to 'Cash at
bank' and 'Current asset investments'. This revision separately reports the
£33,927,000 investment in the JPMorgan USD Liquidity Fund as 'Current asset
investments' and £280,000 as 'Cash at bank', in accordance with the statutory
format required by the Companies Act 2006. This adjustment does not affect any
other line items in the Statement of Financial Position or the total current
assets.
STATEMENT OF CASH FLOWS
For the year ended 31st December 2024
2024 2023(1)
£'000 £'000
Cash flows from operating activities
Net return before finance costs and taxation 477,305 323,787
Adjustment for:
Net gains on investments held at fair value through profit or loss (459,406) (304,636)
Net foreign currency losses/(gains) 743 (5,078)
Dividend income (23,634) (17,733)
Interest income (1,352) (1,654)
Realised foreign currency exchange losses on transactions (292) (756)
Realised foreign currency exchange losses on JPMorgan USD Liquidity Fund (623) (596)
Decrease /(increase) in accrued income and other debtors 31 (14)
Increase in accrued expenses 41 214
Net cash outflow from operating activities before dividends, interest
and taxation (7,187) (6,466)
Dividends received 23,593 14,423
Interest received 1,481 1,656
Overseas withholding tax (paid)/recovered (3,003) 1,182
Net cash inflow from operating activities 14,884 10,795
Purchases of investments (570,659) (625,714)
Sales of investments 595,515 703,254
Net cash inflow from investing activities 24,856 77,540
Dividends paid (14,597) (13,292)
Proceeds from forfeiture of unclaimed dividends 71 -
Issue of shares from Treasury 13,893 -
Repurchase of shares into Treasury (48,069) (45,108)
Proceeds from share forfeiture 731 -
Repayment of bank loan (15,205) (26,929)
Draw down of bank loan 15,790 -
Loan interest paid (583) (1,269)
Private placement interest paid (1,925) (2,007)
Net cash outflow from financing activities (49,894) (88,605)
Decrease in cash and cash equivalents(1) (10,154) (270)
Cash and cash equivalents at start of year(1) 34,207 34,884
Foreign currency exchange movements 985 (407)
Cash and cash equivalents at end of year(1) 25,038 34,207
Cash and cash equivalents consist of(1):
Cash at bank 112 280
Current asset investment in JPMorgan USD Liquidity Fund 24,926 33,927
Total 25,038 34,207
(1) The term 'cash and cash equivalents' is used for the purposes of
the Statement of Cash Flows.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st December 2024
1. Accounting policies
(a) General information and basis of accounting
The Company is a closed-ended investment company incorporated in the UK. The
address of its registered office is at 60 Victoria Embankment, London, EC4Y
0JP.
The financial statements are prepared under the historical cost convention,
modified to include fixed asset investments at fair value, in accordance with
the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice
('UK GAAP'), including FRS 102 'The Financial Reporting Standard applicable in
the UK and Republic of Ireland' and with the Statement of Recommended Practice
'Financial Statements of Investment Trust Companies and Venture Capital
Trusts' (the 'SORP') issued by the Association of Investment Companies in July
2022.
All of the Company's operations are of a continuing nature.
The Directors have undertaken a rigorous review of the Company's ability to
continue as a going concern. The Board has, in particular, considered the
impact of market volatility from the ongoing conflicts between Ukraine and
Russia and in the Middle East as well as increasing uncertainty regarding US
domestic and foreign policy, and does not believe the Company's going concern
status is affected. The Company's assets, the vast majority of which are
investments in quoted securities which are readily realisable, exceed its
liabilities significantly under all stress test scenarios reviewed by the
Board. Gearing levels and compliance with borrowing covenants are reviewed by
the Board on a regular basis.
The Directors have also assessed the ability of the Company to repay the
amount drawn down under its revolving credit facility, which expires in August
2025, and are satisfied as to the Company's ability to raise new finance via
loans or other debt facilities or share issuances, or alternatively through
the realisation of investments in the Company's highly liquid quoted
securities. Furthermore, the Directors are satisfied that the Company and its
key third party service providers have in place appropriate business
continuity plans.
Accordingly, the financial statements have been prepared on the going concern
basis as it is the Directors' reasonable expectation that the Company has
adequate resources to continue in operational existence up to 2nd April 2026
which is a period of at least 12 months from the date of approval of the
financial statements.
The policies applied in these financial statements are consistent with those
applied in the preceding year.
2. Dividends
(a) Dividends paid and declared
2024 2023
Pence £'000 Pence £'000
Dividends paid
Final dividend in respect of prior year 5.25 9,594 4.75 8,727
Interim dividend in respect of the six months 2.75 5,003 2.50 4,565
Total dividends paid in the year 8.00 14,597 7.25 13,292
Proceeds from forfeiture of unclaimed dividends(1) - (71) - -
Net dividends 8.00 14,526 7.25 13,292
( )
(1) During the period, the Company undertook an Asset Reunification
Program to reunite inactive shareholders with their shares and unclaimed
dividends. In accordance with the Company's Articles of Association, the
Company exercised its right to forfeit the shares belonging to untraced
shareholders for a period of 12 years or more. These shares were sold in the
open market and the net proceeds returned to the Company. In addition, any
unclaimed dividends older than 12 years from the date of payment of such
dividend were forfeited and returned to the Company.
All dividends paid and declared in the period have been funded from the
Revenue Reserve.
The dividend proposed in respect of the year ended 31st December 2023 amounted
to £9,587,000. However, the amount paid amounted to £9,594,000 due to shares
repurchased after the balance sheet date but prior to the share register
record date.
In accordance with the accounting policy of the Company, the dividend declared
in respect of the year ended 31st December 2024, will be reflected in the
financial statements for the year ending 31st December 2025.
(b) Dividend for the purposes of Section 1158 of the Corporation Tax Act
2010 ('Section 1158')
The requirements of Section 1158 are considered on the basis of dividends
declared in respect of the financial year, shown below.
The revenue available for distribution by way of dividend for the year is
£19,233,000 (2023: £14,212,000).
2024 2023
Pence £'000 Pence £'000
Interim dividend in respect of the six months 2.75 5,003 2.50 4,565
Final dividend 8.25 14,775 5.25 9,587
Total 11.00 19,778 7.75 14,152
The revenue reserve after payment of the final dividend will amount to
£21,519,000 (2023: £22,000,000).
3. Return per share
2024 2023
£'000 £'000
Revenue return 19,233 14,212
Capital return 452,584 304,104
Total return 471,817 318,316
Weighted average number of shares in issue during the year 181,599,757 183,852,137
Revenue return per share 10.59p 7.73p
Capital return per share 249.22p 165.41p
Total return per share 259.81p 173.14p
The total return per share represents both basic and diluted return per share
as the Company has no dilutive shares.
4. Net asset value per share
The net asset value per Ordinary share and the net asset value attributable to
the Ordinary shares at the year-end are set out below. These were calculated
using 179,095,954 (2023: 182,603,216) Ordinary shares in issue at the year-end
(excluding Treasury shares).
2024 2023
Net asset value attributable Net asset value attributable
£'000 pence £'000 pence
Net asset value - debt at par 1,987,845 1,109.9 1,563,999 856.5
Add: amortised cost of US$65 million 2.55% Private Placement Feb 2031 51,670 28.9 50,727 27.8
Less: fair value of US$65 million 2.55%
Private Placement Feb 2031 (45,875) (25.6) (45,636) (25.0)
Add: amortised cost of US$35 million 2.32% Private Placement Oct 2032 27,907 15.6 27,412 15.0
Less: fair value of US$35 million 2.32%
Private Placement Oct 2032 (23,396) (13.1) (23,328) (12.8)
Net asset value - debt at fair value 1,998,151 1,115.7 1,573,174 861.5
5. Analysis of change in net debt
As at Unrealised Other As at
31st December foreign exchange non-cash 31st December
2023 Cash flows movements charges 2024
£'000 £'000 £'000 £'000 £'000
Cash and cash equivalents
Cash at bank 280 (1,153) 985 - 112
Current asset investments(1) 33,927 (9,001) - - 24,926
34,207 (10,154) 985 - 25,038
Borrowings
Private placement due after one year (78,139) - (1,398) (40) (79,577)
Net debt (43,932) (10,154) (413) (40) (54,539)
(1) JPMorgan USD Liquidity Fund, money market fund.
6. Non-statutory accounts
The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 December 2024 but is derived from
those accounts. Statutory accounts for the year ended 31st December 2024 will
be delivered to the Registrar of Companies in due course. The Annual Report
and Financial Statements include the Report of the Independent Auditors which
was unqualified and did not contain a statement under either section 498(2) or
section 498(3) of the Companies Act 2006
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
JPMORGAN FUNDS LIMITED
2nd April 2025
For further information, please contact:
Priyanka Vijay Anand
For and on behalf of
JPMorgan Funds Limited
Telephone: 0800 20 40 20 or or +44 1268 44 44 70
E-mail: jpmam.investment.trusts@jpmorgan.com
(mailto:jpmam.investment.trusts@jpmorgan.com)
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
ENDS
A copy of the Annual Report will shortly be submitted to the FCA's National
Storage Mechanism and will be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
The Annual Report will be available on the Company's website at
www.jpmamerican.co.uk (http://www.jpmamerican.co.uk) where up-to-date
information on the Company, including daily NAV and share prices, factsheets
and portfolio information can also be found.
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