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JP Morgan American trust ditches stocks on ESG concerns

The managers previously held Marathon Petroleum and Raytheon Technologies. However, JP Morgan said it has “recently made improvements to our ESG integration process and have incorporated new data points including reviewing the United Nations Global Compact (UNGC) severe violators list”.

As a result of the change, the two stocks have been removed and replaced with ConocoPhillips and Bristol Myers Squibb.

“These names are attractive investments with better ESG credentials,” said investment managers Timothy Parton and Jonathan Simon.

The managers, however, also noted that in the six months to the end of June, Marathon Petroleum helped performance.

“Energy companies benefited from higher crude oil prices as a result of a reduction in daily output arising from cold weather in Texas, and a suspension in the oil supply agreement between Iraq, China and Saudi Arabia, which kept production consistent,” they said.

Indeed, along with ESG concerns, Marathon Petroleum had been “challenged by a structural decline in gasoline and diesel demand”.

Along with the ESG changes, the managers also exited 12 new names and added the same amount.

Included in the exited companies was Tesla.

“While we still like the company, we felt it was prudent given the strong recent share price rally and current valuation to take our profits and use the proceeds to build a position in Facebook, which we believe has a better risk/reward profile,” they noted.

Parton and Simon also added Deere & Co, an agricultural equipment company known for its tractors. They noted that Deere & Co’s strive towards technology, which would create equipment that would boost farmers’ productivity.

The company’s net asset value rose by 15.4% in total return terms over the first six months of 2021, outperforming its benchmark, the S&P 500, which rose 13.9% in sterling terms.

The trust is trading on a 5.1% discount, according to the Association of Investment Companies.

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