Against a backdrop of geopolitical wobbles and tariff tantrums from the new US administration, JAGI’s portfolio demonstrated impressive agility. Consider this:
- Benchmark Outperformance: While the MSCI AC Asia ex Japan index fell 2.2% (sterling terms) over the six months to 31st March 2025, JAGI’s NAV decline was limited to just 1.1%.
- Shareholder Returns: Crucially, shareholders enjoyed a positive total return of 1.4% – a testament to the power of that enhanced dividend policy working its magic.
- Long-Term Pedigree: This isn’t a flash in the pan. JAGI has now outperformed its benchmark in 8 of the last 10 calendar years. The cumulative 10-year NAV return of +106% absolutely dwarfs the benchmark’s +74.1%.
Market Movers: The Good, The Bad, and The Volatile
The Asian landscape was a patchwork quilt of performance:
- China’s Surprise Surge (+10.4%): Defying US tariff threats, China rallied on coordinated stimulus (especially for the beleaguered property sector) and the explosive debut of DeepSeek AI – a homegrown platform whose sophistication and low cost stunned Western rivals.
- Drags on Performance: Gains in China were swamped by weakness elsewhere. Taiwan (-6%), South Korea (-11.5%), Indonesia (-20%), and India (broad correction) all struggled. Korea faced political turmoil (martial law, impeachment), Indonesia grappled with policy U-turns, and India contended with slowing consumption, earnings misses, and heightened geopolitical tensions with Pakistan.
The Headline Grabber: That 50% Dividend Hike
This isn’t just incremental – it’s a strategic leap. Approved at February’s AGM:
- From 1% to 1.5% per quarter of NAV, moving the targeted annual yield to 6%.
- Enhanced Policy Stays: This juicy payout continues to be funded from a blend of revenue AND capital reserves – a key differentiator for income seekers.
- Why Capital Over Buybacks? The Board believes this materially boosts JAGI’s appeal relative to peers and drives sustained demand for shares. Early shareholder feedback suggests they’ve called it right.
Financial Engineering: Discount Control & Gearing
Management hasn’t been idle on the financial mechanics either:
Shrinking the Discount & Share Buybacks
- The share price discount to NAV narrowed to 9.2% (from 11.2% at last year-end), sitting snugly within the Board’s 8-10% target range.
- Aggressive Buybacks: The Trust bought back a hefty 7.5 million shares (10.5% of capital) during the period, holding them in Treasury. This directly boosted NAV per share by 3.9p. A further ~732k shares were repurchased post-period-end.
A New Gear: Enter CFDs
- Ending the period with 4.0% gearing, reflecting the managers’ cautiously optimistic outlook.
- How? Not via a traditional loan. JAGI is pioneering the use of Contracts for Difference (CFDs) within the sector. Why? Flexibility, lower cost, and capital efficiency. It’s a bold move the Board is watching closely.
Portfolio Pulsations: Who Drove Returns?
Stock selection remains king. Key plays:
- Big Winner: Alibaba. The decision to overweight paid off handsomely. Stabilising e-commerce market share, rising profitability, and heavy investment in AI/cloud capabilities drove performance.
- Strong Contributor: Hong Kong Exchange. Benefited from recovering Chinese market turnover and growth in secondary issuances.
- Notable Drags: Indian holdings felt the heat. Reliance Industries (weak telecom results) and Zomato (intensifying competition delaying profitability) underperformed.
Gazing Ahead: Choppy Waters, Clear Compass?
The managers (Robert Lloyd & Pauline Ng) pull no punches on the outlook:
- Tariff Turbulence: The US stance threatens global growth. While effective tariffs may be lower than rhetoric, uncertainty is corrosive. Trade-sensitive economies (HK, Korea, Taiwan, Singapore) are most exposed.
- China’s Balancing Act: Pro-growth policies are emerging, and property shows tentative green shoots in major cities. Valuations are off lows, but earnings need to deliver upside surprises to overcome geopolitical gloom.
- AI: The Regional Catalyst: DeepSeek’s launch underscores Asia’s pivotal role in the AI supply chain (servers, components, cooling). This structural tailwind is massive.
- Volatility = Opportunity: The core message? Turbulence creates openings. JAGI’s team, with their long-term focus and deep resources, are primed to capitalise. Falling inflation (allowing Asian rate cuts) and a softer USD add further tailwinds.
The Bottom Line: JPMorgan Asia Growth & Income has delivered a masterclass in navigating volatility. A 50% dividend hike screams confidence in its strategy and reserves. While the Asian road ahead is undeniably bumpy, JAGI’s combination of income firepower, disciplined discount management, innovative gearing, and proven stock-picking prowess makes it a compelling proposition for investors seeking diversified Asian exposure. One to watch? Undoubtedly. One to hold? The track record suggests a resounding yes.
