better insight + better process = better results the income fund that goes further the jpm global...
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Better insight + Better process = Better results
The income fund that goes further
The JPM Global Equity Income Fund
For professional advisers only – not for public distribution
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Better insight + Better process = Better results
Why invest in companies that grow their dividends
Performance of high dividend companies combined with high and low dividend growth
%
Source: Merrill Lynch Global Quantitative Strategy, MSCI, Worldscope.
£50,000
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MSCI AC World Equal Weighted
£96,022
High Dividend Yield
£10,000 in high yielding stocks in 1988, would be worth £96,022. £10,000 in high yielding stocks with high dividend growth, would be worth £166,913.
£166,913
High Div Yield AND High Div Growth
High Div Yield AND Low Div Growth
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Better insight + Better process = Better results
A broader range of opportunities when you search beyond the UK
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Global ex UK UK
FTSE All-World Developed Stocks yielding > 3%No. of Companies
Source: FactSet, FTSE All-World Developed ex Emerging Markets, as at 31 December 2006.
*Other includes Energy, Information Technology, and Healthcare.
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Better insight + Better process = Better results
Source: Bloomberg, 31 December 2006.
Europe ex UK, Pacific ex Japan, US and Japan are MSCI in regional currency. UK is FTSE 350, GBP.
Rebased to 100
Regional changes in dividends
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Europe ex UK - 168%Pacific ex Japan - 157%UK - 81%US - 87%Japan - 72%
Globally dividends are growing
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Better insight + Better process = Better results
Capturing global income opportunities
We target companies with:high dividend yield ANDgrowing their dividends
Strategies targeting the highest yielding companies only tend to work in defensive markets and cyclical sectors
We avoid companies that cut dividends
We identify companies that can grow their dividends so we can grow your income
Cash is King
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Better insight + Better process = Better results
Extending the search beyond the UK…
INSURANCE UTILTIES MEDIA TELECOMS
…gives important diversification benefits
Aviva 4.8
Yield
Centrica 3.6
Yield
Read Elsevier 3.3
Yield
Vodafone 4.5
Yield
UK company
Sampo 5.4 Cemig 6.0 Vivendi 4.0 Vodafone 4.5
GEI company
Source: JPMAM. Yield as at 31 July 2007
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Better insight + Better process = Better results
A broader sector exposure
Healthcare4%
Industrial Cyclical
4%
Banks20%
Property2%
Semi Conduct
3%
Capital Markets
2%
Misc9%
Telecoms18%
Utilities8% Insurance
8%
Energy12%
Cons Non Durable
5%
Autos3%
Sector breakdown
Source: JPMAM. As at 31 August 2007. Based on JPMAM classifications.
In addition to traditional ‘equity income’ sectors, a global perspective offers new opportunities elsewhere…
…and results in sector and regional diversification
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Better insight + Better process = Better results
Stock example: Merck
High quality US healthcare company with a good record of paying high and sustainable dividend payments
Our analysis identified that Merck has the potential for improving future cashflow, which should allow the company to increase its dividend going forward
We bought Merck at the fund's inception and it remains one of our largest holdings
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Share price
Source: Bloomberg, USD, May 2007.
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Better insight + Better process = Better results
Stock example: Sampo
Finnish insurer with strong market presence in the Nordic and Baltic regions selling predominantly life and property insurance
The company doubled its dividend in 2006 and strong cash flow indicates that this is not only a sustainable position but that future dividend increases are likely
We believe expected dividend payments will not be sensitive to the equity markets
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Share price
Source: Bloomberg, EUR, May 2007.
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Better insight + Better process = Better results
Global Equity Income %
Top Ten holdings
... we offer a diversified and attractive dividend based portfolio
UK equity income best ideas are captured in our portfolio….
… but it is ‘best equity income’ ideas from around the world that we focus on
Source: JPMAM. As at 31 July 2007
Intesa Sanpaolo 3.1
Verizon Communications 3.1
Merck & Co 3.0
Altria 2.8
Vodafone 2.7
Koninglijke KPN 2.6
HSBC 2.4
ANZ 2.3
Petroleo Brasileiro 2.3
ING 2.3
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Better insight + Better process = Better results
Why currency matters
We have one of the leading currency management teams in the world
We have researched the optimal currency exposure
We looked at the followingThe Volatility impact of hedgingIncome/return from hedgingThe correlation of currency moves with the equity market
Our conclusion was to primarily hedge the Global Equity Income fund to Sterling
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Better insight + Better process = Better results
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28/02/07 28/03/07 28/04/07 28/05/07 28/06/07 28/07/07 28/08/07
JPM Global Equity Income
JPM Global Equity Performance
%
5 months return: +3.8%
Yield: 4.4%
Source: Bloomberg as at 31 August 2007. Performance is net of share class A fees.
Yield is prospective 2007, gross of tax
'Past performance is not a guide to the future and figures for this fund are shown to illustrate its performance over three months and investment decisions should not be based on its short term performance'.
3 month performance
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Better insight + Better process = Better results
JPMAM already has proven expertise
-4.9
3.0
10.3
6.9
13.6
-3.9
13.2
4.7
3 months 6 months 1 Year Since Inception**
Nikko High Dividend* MSCI World
(%)
Nikko High Dividend Fund: Performance summary
Geometric Excess Return vs MSCI World
+1.1 +1.7 +2.6 +6.3**
... strong returns that would make us 1st quartile within the Global Equity Growth peer group***
Source: As at 31 August 2007. *JPMAM, gross dividends re-invested, NAV net of fees, GBP. **Inception date is 30 November 2005. Returns over one year are annualised. * **Micropal, Global Equity Growth Sector, UK Unit Trusts/OEICs, GBP, based on 12 months of returns.
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Better insight + Better process = Better results
JPM Global Equity Income Fund – Key points
Targets an attractive and growing yield – 4% p.a.**
Truly Global – a go anywhere fund*
Minimal foreign exchange risk – primarily hedged into sterling
Experienced, successful fund manager backed by a large team based around the world – already invests over £500 million using this approach
*Subject to a recognised stock exchange
**2% above MSCI World Index yield as at 31 July 2007. Gross of tax.
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Better insight + Better process = Better results