LONDON: JPMorgan European Investment Trust proposes change to Income portfolio mandate. Changing dividend landscape means ex-UK focus is now possible
Mar 07, 2013
London, 7 March 2013: The JPMorgan European Investment Trust has outlined a proposal to amend the investment policy of its Income portfolio to a focus on Continental European companies, rather than its current pan-European focus.
The investment trust, launched in 1929, was reorganised into Income and Growth portfolios in 2006. While the Growth portfolio had a Europe ex-UK mandate and benchmark (FTSE World Europe ex UK) from inception, it was felt that the Income portfolio would be better able to provide a sustainable yield for its investors by including an allocation to UK-listed companies, and hence it was benchmarked against the pan-European MSCI Europe index.
Since the global financial crisis, however, the dividend picture across Europe has changed markedly. While previously reliable UK income stocks like the banks and BP have cut or passed their dividends, corporate balance sheets in Europe are significantly stronger than they have been for a generation, and steps have been taken at the company management level to protect balance sheets while maintaining or increasing payout levels.
Stephen Macklow-Smith, who manages the Income portfolio alongside Michael Barakos and Alexander Fitzalan-Howard, said: "Throughout the recent crisis many European companies have been quietly prospering, simply because they make the stuff that the rest of the world is queuing up to buy. Exports are the key driver of growth in Europe, rather than consumption or government expenditure, both of which are more affected by the domestic economic picture. Around 50% of European companies' revenues are from outside Europe, and emerging markets are key."
James Saunders Watson, Head of Marketing, Investment Trusts at J.P. Morgan Asset Management, added: "While there was a clear rationale for including UK stocks in the Income portfolio at the time of reconstruction, it has long been the case that British investors prefer their UK exposure separate from their European exposure. By aligning the two portfolios of the JPMorgan European Investment Trust, investors now have a clear choice between investing in Continental European equities either for income or growth."
If the trust's shareholders agree to the change to the investment policy, the Income portfolio's benchmark will change to the MSCI Europe ex UK index (in sterling, with net dividends reinvested). It is proposed that the Growth portfolio also changes its benchmark to this index, in order to facilitate like-with-like comparison between the two portfolios.
The proposal will be considered at a General Meeting of the trust's shareholders on 26 March.
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Notes to Editors
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J.P. Morgan Asset Management is part of JPMorgan Chase & Co. and is a global asset management leader providing world-class investment solutions to clients. With US$1.4 trillion in assets under management (the Asset Management client funds of JPMorgan Chase & Co. as at 31 December 2012) and offices in 41 locations around the world, J.P. Morgan Asset Management offers global coverage with a strong local market presence, and leadership positions in most asset classes.
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