JPMORGAN CLAVERHOUSE: Prime Minister’s given back UK its street cred

‘Boring is the new exciting.’ That’s the view of William Meadon, co-manager of £416 million investment fund JP Morgan Claverhouse. Meadon, who co-runs the publicly traded fund with Callum Abbot, says the days of cheap money, low interest rates and rising tech stock prices are over.

For investors, he says, now is the time to consider “get rich slowly” funds — essentially investment vehicles like JP Morgan Claverhouse that make money by managing a portfolio of companies that pay dividends.

“Things are as good as they get,” says Meadon. We offer investors dividend income equivalent to 4.7% per annum from a portfolio of 63 listed UK stocks. An income that has grown every year for the past 50 years and comes from a stock market that is among the cheapest of the developed markets.’

The trust pays shareholders a quarterly dividend. Last year, these payments totaled 33 pence, compared to 30.5 pence the year before – an 8.2 percent increase. The shares are trading for around £7.

Meadon added: ‘In the midst of all the calamity caused by Brexit and the pandemic, it’s time to buy the UK market. It stands at a 40 percent discount to the S&P and Nasdaq stock market indices in the United States. Buy UK stocks and you’re buying cheap global companies – companies that generate their income around the world.

‘For example, why buy shares in the American tobacco giant Philip Morris when you can buy British American Tobacco at a substantial discount.’ He believes Rishi Sunak has managed to return some of the ‘UK’s street cred’.

While the trust compares itself to the broader FTSE All-Share Index, it is primarily a fund that looks for stocks that make up the FTSE 100 – the 100 largest companies by market capitalization.

Dividends are crucial, which explains why companies like Shell, BP and tobacco giant BAT are all in the top ten.

“The FTSE 100 is a haven for income seekers,” says Meadon. “But it’s volatile and lumpy, and that’s not good for Aunt Agatha. During the 2008 financial crisis and the 2020 pandemic, we saw dividend cuts at UK plc. What we and many other mutual funds can do with equity income is smooth out these payments for investors.”

It does this by tucking away some of the income it earns from its holdings in the good years — then using it to supplement dividends in years like 2008 and 2020 when earnings dry up. Rival trusts such as City of London, Bankers, Alliance, F&C and Brunner have records of more than 50 years of dividend growth.

Meadon also likes FTSE 100 companies because he says the world has changed since Russia invaded Ukraine just over a year ago. Investors, he says, take comfort in large liquid stocks that have global reach in terms of the business they do.

Major holdings outside the FTSE 100 include furniture retailer Dunelm and major watch retailer Watches of Switzerland. Dunelm continues to take market share from its rivals, says co-manager Abbot.

“What it does better than competitors is logistics. Dunelm makes sure it has the furniture in stock that customers want.’ Watches of Switzerland, adds Abbot, is successfully expanding its business in the United States, with demand for its luxury watches remaining resilient.

The fund’s exposure to smaller UK companies is through sister investment trust JP Morgan UK Smaller Companies.

The trust’s annual fees total 0.66 percent. The exchange identifier is 0342218 and ticker JCH.