JPMorgan UK Small Cap Growth and Income Trust
JPMorgan UK Small Cap Growth & Income aims to provide investors with capital growth and an enhanced dividend from UK-listed companies further down the market-cap scale. It invests in high-quality, fast-growing, and innovative smaller companies that drive the UK economy, using a bottom-up approach to identify attractive stocks. Following its merger with stablemate JPMorgan Mid Cap, the trust also offers an enhanced dividend strategy.
Our Opinion
Fund Managers
Fund Managers
Georgina Brittain, Co-manager Georgina Brittain is a portfolio manager within the J.P. Morgan Asset Management International equity group, based in London. Georgina joined the firm in 1995. She is also the fund manager for the JPM Life UK Small Cap fund and the JPM UK Smaller Companies fund. She obtained a MA in Classics from the University of Oxford, and earned a Diploma in Law from City University, London. She is also a qualified barrister.
Katen Patel, Co-manager Katen Patel is a portfolio manager within the J.P. Morgan Asset Management International equity group, based in London. An employee since April 2013, he previously worked at HSBC Bank Plc in a European equity sales role. He obtained a BSc. in Management from the London School of Economics and Political Science. Katen is a CFA charterholder.
Georgina Brittain, Co-manager Georgina Brittain is a portfolio manager within the J.P. Morgan Asset Management International equity group, based in London. Georgina joined the firm in 1995. She is also the fund manager for the JPM Life UK Small Cap fund and the JPM UK Smaller Companies fund. She obtained a MA in Classics from the University of Oxford, and earned a Diploma in Law from City University, London. She is also a qualified barrister.
Katen Patel, Co-manager Katen Patel is a portfolio manager within the J.P. Morgan Asset Management International equity group, based in London. An employee since April 2013, he previously worked at HSBC Bank Plc in a European equity sales role. He obtained a BSc. in Management from the London School of Economics and Political Science. Katen is a CFA charterholder.
Risk
Company Description
Fund Performance
Risk
Company Description
Investment process
The team’s ethos is that attractively-valued, high-quality stocks with positive momentum outperform the market. To find these companies, the team essentially want to answer three questions: Is it a good business? Is it attractively valued? And is the outlook improving? Stocks must be profitable and cash flow generative to be considered for inclusion.
The quality of the business is evaluated through the profitability, sustainability of earnings and capital allocation discipline, while the company valuation is assessed to see if its future prospects have been incorrectly estimated by the market. The final element (is the outlook improving) looks at the operational momentum of the business and how this is being reflected in expectations. The final portfolio holds between 60-120 holdings. The fund can, and does, hold a meaningful allocation to medium-sized companies.
Prior to the merger, the trust did not have a specific income target. However, following the merger with JPMorgan Mid Cap, the trust now pays four equal quarterly dividends, with a total that is equivalent to 4% of NAV as at July 31 each year, the end of the trust’s financial year. However, it is important to note that this has not changed the investment process – the team are happy to own stocks which do not pay a dividend if they feel they add value to the portfolio.
JPMorgan UK Small Cap Growth & Income’s charging structure looks to pass on the economies of scale to investors as they are achieved through a tiered management fee. The first £200m of net assets attracts a fee of 0.65%, with assets above this charged at 0.55%. Ongoing charges come in at 0.78% (company fees and expenses).
Risk
The trust invests further down the UK market-cap scale, which can bring greater volatility. However, the focus on quality franchises, which are both profitable and cash-flow generative, will help mitigate this risk to some degree. A proportion of the portfolio is held in companies between £100 and £300m, however, liquidity pressures on these businesses are negated by the closed-ended structure.
The Board has overall responsibility for reviewing the effectiveness of the system and risk management and internal control which is operated by the asset manager and the company’s third party service providers. To help manage risk, the Audit Committee maintains a risk matrix, as part of the risk management and internal control processes, detailing the principal and emerging risks facing the company at any given time.
ESG
ESG is considered throughout the decision-making process as the team believe corporate governance, in particular, plays a big part in the long-term success of small-caps historically.
JPMorgan takes an integrated approach to ESG investing, and considers environmental, social and governance (ESG) as financially material in investment analysis and investment decisions. JPMorgan addresses ESG issues at three different stages of the stock selection process: research, engagement, and portfolio construction.
The ESG score for each company is informed by the firm’s proprietary research platform, as well as company engagements. The analysts complete a 40-question ESG checklist on over 2,500 companies globally. The ESG score is in development with their Sustainable Investing and Stewardship team.
Gearing
The portfolio managers have the flexibility to gear within a range of 10% cash to 15% geared in normal market conditions. The managers have access to a flexible £55m loan, which was agreed in the first quarter of 2025.