JPMorgan China Growth & Income plc
JPMorgan China Growth & Income trust invests in ’Greater China’ companies which are quoted on the stock exchanges of Hong Kong, China and Taiwan, including A shares listed in Shenzhen and Shanghai or which derive a substantial part of their revenues or profits from these territories. Launched in 1993, the managers are growth-oriented investors who target higher quality companies within their ‘best ideas’ approach to the region, while also paying an income.
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Rebecca Jiang, Managing Director at J.P. Morgan Asset Management, is a country specialist for Greater China equities and a member of the Greater China Team within the Emerging Markets and Asia Pacific (EMAP) Equities Team. Based in Hong Kong, she joined the firm in 2017 after six years at Fidelity Worldwide Investment, where she was a senior equity research analyst covering sectors such as metals and mining, banks, healthcare, and gaming. Rebecca began her career in 2005 at Deutsche Bank as an equity research analyst. She holds a B.A. in International Finance and a Master in Finance from Fudan University and is a CFA charterholder.
Li Tan, Executive Director at J.P. Morgan Asset Management, is a country specialist for Greater China equities and a member of the Greater China team within the Emerging Markets and Asia Pacific (EMAP) Equities team. Based in Hong Kong, he has been with the firm since 2011. Before his current role, Li was a sector research analyst focused on Greater China financials, and he also held strategy roles in J.P. Morgan's Investment Banking and Commercial Banking divisions. He holds an MSc in Management and Strategy from the London School of Economics and Political Science.
Rebecca Jiang, Managing Director at J.P. Morgan Asset Management, is a country specialist for Greater China equities and a member of the Greater China Team within the Emerging Markets and Asia Pacific (EMAP) Equities Team. Based in Hong Kong, she joined the firm in 2017 after six years at Fidelity Worldwide Investment, where she was a senior equity research analyst covering sectors such as metals and mining, banks, healthcare, and gaming. Rebecca began her career in 2005 at Deutsche Bank as an equity research analyst. She holds a B.A. in International Finance and a Master in Finance from Fudan University and is a CFA charterholder.
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Quote from the Fund Manager
The world’s largest economy is too big for investors to ignore. There is never a dull moment investing in China; in-depth research, a willingness to ask difficult questions and patience are crucial
Rebecca Jiang
Co-Manager
Investment process
JPMorgan China Growth & Income is a high conviction portfolio of 60-80 stocks with a focus on higher quality companies. The managers are fundamental, bottom-up stock pickers with the strength of the research team allowing them to actively cover an investment universe of 590 Greater China stocks, including 270 A-Shares.
The investment process is split into three stages. Fundamental research includes coverage of the universe of stocks, with the team focusing on three specific areas; a strategic classification of the business based on its economics, duration and governance; a risk profile analysis (which includes ESG measures); and a view on the company’s expected returns over five years. The second stage focuses on idea generation – which covers both quantitative and qualitative analysis. The final stage is portfolio construction which blends multiple judgements to reflect the managers’ views on expected risk adjusted returns and the conviction of each position in the portfolio.
JPMorgan China Growth & Income trust can hold a maximum of 10% in a single stock and can hold up to 50% in A-shares. The focus on higher quality businesses and structural growth opportunities has seen a greater focus on technology and automation, healthcare and consumption in recent times. By contrast, there has been an underweight towards banks and energy. The income element of the portfolio was only introduced in 2020 and allows the trust to pay an equivalent to 4% of the company’s NAV (net asset value), although this is subject to market conditions.
Risk
Investors should note that there can be significant economic and political risks inherent in investing in emerging economies. As such, the Greater China markets can exhibit more volatility than developed markets and this should be taken into consideration when evaluating the suitability of the company as a potential investment. The trust is likely to underperform in a value/cyclically driven market.
ESG
ESG - Integrated
JPM considers ESG issues as integral to the investment process and will rarely invest in a company if it is involved in a controversial industry or practice. Each of the Environment, Social and Governance elements are considered when performing stock analysis, with an emphasis on corporate governance. JPM takes a three-pronged approach to ESG: Research: JPM has a 40-question ESG Checklist which has 12 questions on environment, 12 on social and 16 on governance. Additionally, its Materiality Framework identifies the five key sustainability issues that are relevant for 54 sub-industries. Companies are scored on these issues based on the analysts’ fundamental views, allowing teams to identify best-in-class companies. Engagement: Corporate engagement is conducted by JPM’s analysts and portfolio managers in partnership with the Investment Stewardship Team, assesses how companies on the Investment Stewardship Focus list deal with and report on social and environmental risks and other issues specific to their sectors and/or industries. Portfolio construction: Conviction is considered a function of the quality of the business and understanding of the opportunity and the risks, which are informed by JPM’s Strategic Classification, Risk Profile and Materiality Framework.
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