Exposure to the beneficiaries of AI-related capex spending: JPMorgan American

JPMorgan American (JAM) has been the best-performing trust in the AIC North America sector over the past five years (to 11/09/2026), delivering more consistent returns than its peers across the period, notably thanks to its allocation to both growth and value stocks. JAM has also kept pace with the S&P 500 over the same timeframe.

Currently, the Portfolio is tilted towards the growth factor, as managers Jack Caffrey, Graham Spence, and Felise Agranoff have increased their exposure to companies well positioned to benefit from accelerating investment in AI. For example, they have built a new position in Micron Technology, expecting the company to continue seeing strong demand for its memory chips. The team also initiated a small position in SpaceX, Elon Musk’s aerospace and space transportation company, as it offers exposure to space-based computing and AI-related initiatives.

However, the team believes that the most attractive beneficiaries of the AI investment cycle are outside the information technology sector. That includes, for example, the industrials sector, with the team having built new positions in Comfort Systems, a provider of mechanical and electrical contracting services, as well as United Rentals, an equipment rental company. Conversely, they have exited their positions in companies they see as exposed to AI disruption, like customer relationship management platform HubSpot, or where their conviction has diminished, such as 3M Company, a producer of industrial and consumer goods.

To increase exposure to smaller companies without reducing the trust’s allocation to large caps, Gearing has been increased since the end of last year, from 4.7% to 6.3% as at the end of July. Meanwhile, JAM is currently trading at a 3.2% Discount, in line with its five-year average.

In our view, JAM is an attractive vehicle to gain comprehensive exposure to the US equity market, with the trust’s allocation to smaller companies ensuring full coverage of the market-cap spectrum. In addition, the blend of complementary styles, growth and value, should enable the trust to adapt to different market environments. We would argue that this approach has proven its merits, as JAM has outperformed all its sector peers over the past five years, while it has also managed to keep up with its benchmark, a noteworthy achievement, as very few active managers have been able to outperform or even match the returns of the S&P 500 over that period.

We believe that the changes made to the portfolio since the start of 2026 could make JAM particularly attractive to investors with a bullish view on AI, as the managers have increased their allocation to companies exposed to AI-related capex spending. We note that this has been, in part, achieved through new positions in less well-known but more attractively valued AI beneficiaries, notably in the industrials sector. To us, this highlights that the managers remain disciplined on valuations and are not buying AI at any price.

Finally, we note that JAM is very cost competitive, with an OCR of 0.34%. We think this is low for a strategy overseen by highly seasoned managers, each boasting decades of experience, and supported by deep resources at J.P. Morgan Asset Management, including 40 career research analysts.