Invests in high-quality Chinese companies: JPMorgan China Growth & Income

JPMorgan China Growth & Income (JCGI) offers investors exposure to high-quality-growth companies across Greater China, including mainland China, Hong Kong and Taiwan, with its investment team focussed on identifying businesses capable of delivering sustainable, above-market earnings growth over the long term. The investment approach remains firmly rooted in bottom-up fundamental research, with an emphasis on profitability, durability and long-term relevance, rather than short-term macro or political forecasting, alongside a disciplined approach to valuation.

Portfolio activity over the past year reflects this focus. The managers have added selectively to high-quality companies where valuations appeared to understate long-term growth potential, particularly across technology and healthcare, including Wus Printed Circuit Kunshan and GenFleet Therapeutics. Despite these changes, the Portfolio retains its long-standing quality-growth bias and remains underweight more cyclical areas with weaker structural growth prospects like energy.

Performance has improved meaningfully over the past 12 months as Chinese equities staged a recovery. JCGI delivered a NAV total return of 34.5%, ahead of the MSCI China Index’s 29.9% return. This follows a challenging five-year period for both the trust and the wider China market, underscoring the volatility inherent in the region but also the potential upside when sentiment and fundamentals begin to realign.

JCGI’s Dividend policy remains unchanged, with an annual distribution targeted at 4% of NAV. For the year to September 2025, this equated to 10.92p per share. Looking ahead, the board has already announced a higher dividend of 13.56p for the 2026 financial year, an increase of around 24%, reflecting the recovery in NAV used to set the distribution.

At the time of writing, JCGI trades at a 10.0% Discount to NAV, modestly wider than both its own five-year and unweighted peer group average.

China will not be for everyone. It is a volatile market, and the past five years have shown that sentiment can shift quickly. For more risk-averse investors, it may be reason enough to stay away. Yet for those building globally diversified portfolios, overlooking the world’s second-largest economy entirely is a bold choice given its economic importance and long-term growth potential.

Moreover, the current backdrop is interesting: China remains one of the few major equity markets trading well below previous highs, with valuation gaps versus US peers still striking. Whilst geopolitical tensions, regulatory uncertainty and the legacy of the property downturn warrant caution, much of this is arguably now reflected in prices. Signs of stabilisation are also emerging, with parts of the property market recovering, policy becoming more supportive and “anti-involution” measures beginning to tackle overcapacity and destructive price competition. Low interest rates and elevated household savings further support the case, as it suggests there is capital on the sidelines that could gradually re-enter the real economy and equity markets as sentiment improves.

In this context, we think investment trusts are a particularly effective way to access China. The market can be illiquid and sentiment-driven, making the closed-ended structure well suited to long-term, bottom-up investing without the pressure of daily flows. Against this backdrop, JCGI stands out, combining exposure to high-quality-growth companies aligned with China’s structural priorities with a differentiated income stream that doesn’t compromise its growth focus, although the income will vary in line with movements in NAV.

For patient investors willing to accept volatility, we think JCGI offers a distinctive route to China’s growth at a time when valuations, sentiment and structural dynamics appear unusually compelling — all at a wider-than-average discount.