Jack Caffrey, co-manager JPMorgan American Investment Trust plc (JAM):
“U.S. Equities posted another strong year with the S&P 500 up over 60% cumulatively since the start of 2023. Returns have been historically concentrated within the “Magnificent 7” cohort during this period, however the back half of 2024 has seen broader market participation. While conviction remains in the broadening out of leadership across the market cap spectrum, active management will be key amid heightened market expectations with company fundamentals driving returns.
“In this climate, rigorous stock selection of quality companies that offer value and growth potential is essential. Our high conviction large cap portfolio, which represents 90% or more of the trust’s assets is comprised of names that can stand strong in the long term.
“On the value side of our portfolio, a good example of this is McDonald’s. We believe the fast-food chain is well positioned as it has an iconic, quintessential American brand and a very defensive model. Nowhere is this better exemplified than the fact that a third of the US population eats there every week, putting the value and consistency that the brand provides on a pedestal that is borne out through sales.
“On the growth side of our portfolio, the team continues to uncover differentiated opportunities outside the “Magnificent 7,” these companies span a variety of sectors executing on a range of open-ended opportunities such as manufacturing and power infrastructure within industrials to weight loss drugs and robotic surgery within health care. Our conviction remains in the secular growth opportunity within artificial intelligence, we also invest in the lesser-known companies enabling the AI boom. The infrastructure required to support generative AI, such as data centres, provides opportunities for investors. For instance, we hold positions in Trane Technologies, which specialises in building systems to cool the vast data centres essential for AI operations.”
