JPMorgan Mid Cap (JMF) aims to generate long-term capital growth from investment in a portfolio of UK mid-cap stocks. Managed by Georgina Brittain and Katen Patel, the trust looks to identify structural winners in the mid-cap market and utilises a stylistically blended approach which combines qualitative and quantitative elements.
As we have detailed in the Portfolio section, the managers seek to identify companies with a mixture of quality, value and momentum factors, and believe this approach is well suited to a mid-cap market where broker coverage is lower than in the large-cap market (and thus there are more opportunities to identify unappreciated growth and/or mispricing opportunities).
Performance has been very strong over the past 12 months, with NAV returns significantly outstripping the benchmark index. The wider market seems to have recognised this, with the discount narrowing over this period to its present level of c. 2.7% (as of 14/02/2020), helping to ensure share-price returns were very strong over this period.
Whilst the primary aim of JMF is to generate capital growth, the managers and board also aim to see the dividend rise in excess of inflation every year. This has been comfortably achieved in recent years, allowing the board to increase distributions at a rate substantially above inflation whilst simultaneously accumulating further revenue reserves, as we cover in the Dividend section. JMF presently yields c. 2.1%.
As a result of the managers’ positive outlook for the UK mid-cap market, gearing has been increased and now stands at c. 9%. This reflects the variety of opportunities they continue to identify.