Jupiter Green (JGC)
29/07/2024
Results analysis from Kepler Trust
Intelligence
In the year to 31/03/2024,
Jupiter Green (JGC) delivered positive NAV total returns of 1.9%.
This compares to a 11.5% rise in the trust's benchmark, the MSCI
World Small Cap Index. Share price total returns were
-19.1%.
Whilst returns over the full
year were challenging, the performance in the second half was much
stronger, with JGC returning 12.1% in NAV terms from 01/10/2023,
broadly in line with the benchmark.
The trust's discount
significantly widened from 13.4% to 31.3% over the year. This has
subsequently narrowed to around 25% since the period end. The board
continues to monitor the discount and repurchased 2,031,011 shares
over the period at an average discount of 16.9% to
NAV.
JGC Chair Michael Naylor
said: "As attitudes toward addressing climate solutions shift,
there is a broadening of the value chain beyond the conventional
lens. The opportunities throughout the market that this creates
will be plentiful and we firmly believe the Jupiter Green
Investment Trust remains well-positioned to identify
them."
The Board also announced that
it is currently evaluating options for the future of the trust,
given its size and the challenging macroeconomic environment. The
Chairman noted that it may not be in the best interests of
shareholders for the trust to continue in its present form and that
further announcements would follow.
Kepler
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Jupiter Green (JGC) has a
wide-ranging remit to invest in companies providing innovative
solutions to some of the most pressing environmental challenges
facing the world. The trust offers a well-diversified portfolio
across six key themes, with a preference towards small and mid-cap
firms due to their growth potential.
The macroeconomic and
geopolitical backdrop has undoubtedly created a drag on performance
in the period, with clean energy companies in particular coming
under pressure from the sharp rise in interest rates. However,
strong performance from other themes demonstrated the benefits of
taking a broad approach to the environmental solutions
sector.
However, one of the downsides
of a diversified portfolio is underperforming sectors creating a
drag on returns and this has been the case for JGC in the last
financial year. In line with the broader sector, clean energy has
struggled in the face of higher interest rates, rising costs and
supply chain issues. As a result, the trust's NAV return of 2% is
significantly below the 11% return for its benchmark, the MSCI
World Small Cap Index, for the financial year.
The trust's share price total
return of -19% for the financial year has led to a widening in the
discount to more than 30%, although this has since narrowed to
around 25% (as at 25/07/2024). The board has been active in trying
to narrow this discount through share buybacks.
It's worth noting that JGC
traded at a premium as recently as 2021 on the back of high
investor appetite for the sector but current sentiment is weighing
heavily against smaller trusts in light of higher interest rates.
Given that the board has announced a review, the discount may start
to narrow. In the meantime, the forecast cuts to base rates, in
addition to the strong secular growth drivers for the sector, could
provide a more conducive environment for JGC going
forward.
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