One of the industry pioneers is the JPMorgan Global Growth and Income Trust

According to Kaylie Pferten, yield-hungry investors who don't want to compromise growth will find the JPMorgan Global Growth & Income trust appealing

In order to address the fund's ongoing discount to net asset value (NAV), the directors of JPMorgan Global Growth & Income (LSE: JGGI), formerly known as the JPMorgan Overseas Investment Trust, implemented a new approach ten years ago. The trust would pay an annual dividend of at least 4% of net assets while making investments throughout the world regardless of income. The goal was to provide investors with a desirable income through a strategy unrestricted by the pursuit of yield.

The fund that was renamed was a huge success right away. Performance increased, and the NAV discount vanished. The trust expanded through the acquisition of two additional trusts in 2021 and 2025, the issuance of new shares for cash, and the realization of increased economies of scale. Ten years ago, JPMorgan Global Growth & Income had 200 million assets; today, it has 3.4 billion, with operating costs of only 0.42 percent.

The period of poor returns at JPMorgan Global Growth & Income.

However, during the broader market downturn for investment trusts in 2022, the shares went back to a discount, forcing the directors to resume repurchasing shares. In August 2024, the discount started to decline, but performance started to decline. The benchmark, the MSCI AC World index, is outperformed by 11% and 13.4%, respectively, by a NAV return of 16.7% over a year and 50.9% over three. James Cook, the manager, notes that since the strategy shift, it is still ahead by almost 2% annually (net of fees).

He states, "We have seen many similar drawdowns for our style over the last 30 years." "They cost 9% of performance and last an average of one year. As a reflection of market trends, the most recent one is more expensive and has lasted longer. "The market has been heavily dependent on momentum rather than long-term valuations and earnings growth, but fundamental investors will benefit greatly from a return to normal, as it has been following similar periods in the past."

Based on free cash flow, Cook and his team search for companies with high-quality earnings that are growing 2 percent faster than the average but are valued similarly to the market. In the investment universe, less than 3% of 2,500 stocks provide all three."

James Cook, the manager, supports AI winners.

Cook has been purchasing AI-related semiconductor stocks like Nvidia, which account for 6.3% of the portfolio, and lowering his exposure to "low growth cyclicals." "The AI market continues to grow, and its most recent Rubin chip is five times more powerful than the Blackwell chip, even though it is back at a trough-level multiple."

AI "is larger than the internet in 2000, with long-term growth." Manufacturers of semiconductors are sold out for years. TSMC is among the top five holdings as a result. It produces more than 90% of the world's cutting-edge chips and has a very appealing valuation."

With the exception of Alphabet and Amazon, which are categorized differently, the technology sector accounts for 25% of the portfolio overall. Additionally, Cook has been purchasing Mastercard, a payment network that is "widely regarded as an AI loser but the fraud detection and identity verification services it provides are increasingly important."

Tokyo Marine, an insurer, was added due to its "strong earnings growth" just before Berkshire Hathaway bought a stake and increased the share price by 30%. Assisted living company Vesta is "the beneficiary of demographic change in a market with a structural supply shortage" in the United States. On "a really attractive valuation," the oil giant Shell was acquired.

There aren't many of these with high yields. The flexibility of this strategy is demonstrated by the fact that sizeable positions in Alphabet, Amazon, Apple, Microsoft, Nvidia, and TSMC would not be feasible if the 4 percent yield were paid exclusively from income. JPMorgan Global Growth & Income's competitive advantage has been diminished as the majority of JPMorgan's other trusts and a few other businesses have followed suit by paying an increased dividend out of capital. However, it is appealing to yield-hungry investors who are unwilling to forgo capital returns in favor of additional income, and Cook makes a strong argument that the period of dull returns is almost over.