JPMorgan US Smaller Companies Investment Trust (JUSC) has for the past five years delivered benchmark-beating performance through a consistent stock picking approach to US smaller companies. The managers have a clear preference for highquality companies, with strong management teams and a sustainable competitive advantage. They place a strong emphasis on the price they pay for companies and because their philosophy rests on remaining invested with established companies generating consistent earnings growth, and a long-term ‘vision’ from the management teams that run them, the portfolio turnover (24%) is low compared with the category average (46%). Accounting for close to 50% of the portfolio, financial services, producer durables and consumer discretionary are the largest sectors by absolute weight. However, financial services remains one of the largest underweight positions, largely due to the limited exposure to real estate investment trusts (REITs). Technology and healthcare are two other largely underweight sectors. This is because the managers place a great deal of importance on not over-paying for a company and both sectors are expensive, and so it is harder for them to find an abundance of companies that meet their investment criteria in these areas. The managers’ skill is evident in the level of alpha the portfolio has generated over the years – it sits in the top ten greatest alpha generating trusts in the IA North America and AIC North America/North American Smaller Companies sectors over three and five years. In performance terms, over five years the trust has delivered NAV total returns of 118.6%. In comparison, the Morningstar IT North American Smaller Companies and IA North American Smaller Companies sectors returns have been 96.1% and 88.2% respectively. JUSC has also outperformed large-cap funds - the IA North America sector and Morningstar IT North America sector have delivered returns of 95.5% and 95.3% over five years respective. More recently however, the trust’s performance relative to the benchmark has been weaker thanks (in the managers’ view) to the current focus on growth and momentum in the market.