J.P.Morgan American Investment
Trust plc
Half year report & financial statements
for the six months ended 30th june 2024
Performance attribution
For the six months ended 30th June 2024
| % | % | |
| Contributions to total returns | ||
| Net asset value (debt at fair value) total return in sterling termsAPM | 19.1 | |
| Benchmark total return (in sterling terms) | 16.1 | |
| Excess return | 3.0 | |
| Combined Portfolio return in US dollar terms1 | 18.3 | |
| Benchmark total return in US dollar terms | 15.2 | |
| Combined Portfolio relative return in US dollar terms | 3.1 | |
| Large & Small Cap Portfolio contribution2: | ||
| Large Cap Portfolio in US dollar terms | 3.8 | |
| Small Cap Portfolio in US dollar terms | -0.7 | |
| Combined Portfolio relative return in US dollar terms | 3.1 | |
| Contributions to return | ||
| Equity portfolio (ex-cash and gearing) in US dollar terms | 2.5 | |
| Cash and gearing impact in US dollar terms3 | 0.6 | |
| Combined Portfolio relative return in US dollar terms | 3.1 | |
| Effect of foreign currency translation4 | 0.0 | |
| Combined Portfolio relative return in sterling terms | 3.1 | |
| Management fee and other expenses5 | -0.2 | |
| Finance costs5 | -0.1 | |
| Share buybacks and issuances6 | 0.0 | |
| Impact of fair valuation of debt7 | 0.0 | |
| Technical differences8 | 0.2 | |
| Total excess | 3.0 |
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 issuance – measures 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. Share issuances will increase the net asset value of the Company as they are issued at a price above the net asset value.
7 The impact of fair valuation includes the effect of valuing the combined US$100m private placements at fair value.
8 A portion of the technical differences arise as a result of rounding to 1 decimal place of the individual line items shown in the table.
APM Alternative Performance Measure (‘APM’).
Chair’s Statement
I became Chair of the Company following the conclusion of the AGM in May 2024, having joined the Board in 2017. I took over the chairmanship from Dr Kevin Carter who had been a Director of the Company since 2014 and Chair since 2017. I would like to take this opportunity on behalf of the Board to thank Kevin for his leadership and dedication during his tenure, first as a Director, and then as Chair of the Company.
Performance
The first six months of 2024 remained positive for the US market. Despite some continuing economic and political uncertainty, US equities extended their streak of new all-time highs, buoyed by hopes of a soft economic landing, a favourable prognosis for corporate earnings and further gains in the handful of stocks expected to benefit most from the rapid adoption of artificial intelligence (AI) tools. US interest rates peaked in August last year, and have remained steady in the year to date, ensuring further modest declines in US inflation towards the Federal Reserve’s 2% target. This steady rate stance disappointed some investors who were hoping the Fed would begin to reduce rates in the first half of 2024, but it seems likely that the easing cycle will commence soon, especially now the labour market appears to be slowing.
Against this supportive background, the Company’s total return on net assets per share in sterling terms over the period was +19.1%. The return to Ordinary shareholders per share in sterling terms was +16.7%, reflecting a small widening of the Company’s discount to net asset value per share (‘NAV’) at which the shares traded over the period. The total return from the Company’s benchmark, the S&P 500 Index in sterling terms, was +16.1%, resulting in outperformance of +3.0 percentage points, in NAV terms.
Since the Company changed its investment approach on 1st June 2019, it has outperformed the benchmark index by +22.4 percentage points in the subsequent 61 months through to the end of June 2024, providing a NAV total return to shareholders of +134.8% compared with a benchmark return of +112.4%. This represents an annualised outperformance of +2.3% since this change.
Outlook
The Board shares the Manager’s positive assessment of the outlook for US equities, and your Company, over the near-term, and beyond. November’s US Presidential election may spark some market jitters, due to uncertainty regarding the winner’s domestic political priorities and their stance on various geopolitical situations, but the economy appears to be on a sound footing and should benefit from interest rate cuts later this year and next.
The Company’s long-term performance track record attests to the Manager’s skill at negotiating the unusual, challenging and varied market conditions that have confronted investors in recent years. The Board welcomes the Manager’s ongoing efforts to identify the most attractive investment opportunities on offer in the US and other North American markets, and remains confident in the Manager’s ability to continue delivering capital growth and outperformance for shareholders over the medium term.
Robert Talbut
Chair