LONDON: Many happy returns: JPMorgan Global Emerging Markets Income Trust celebrates third birthday with 31% return
Aug 06, 2013
JPMorgan Global Emerging Markets Income Trust, which launched on 29 July 2010, has produced a share price total return of 31.33% in its first three years (1 August 2010 to 31 July 2013), according to figures from J.P. Morgan Asset Management/Datastream, compared with a return of 6.46% from the benchmark MSCI Emerging Markets Net Index.
The investment trust, which aims to offer a lower-volatility route into emerging markets by targeting companies that pay attractive dividends, was the first of its kind in the UK when it launched. Other investment trusts targeting an income from emerging markets had tended to concentrate on Asia, rather than looking for opportunities globally.
As returns on cash and bonds have remained depressed, investors in search of income have embraced a more diverse opportunity set. Demand for the JPMorgan Global Emerging Markets Income Trust's investment strategy has been clear from the outset: since its launch there have only been four days when the trust's shares have not traded at a premium (source: Bloomberg). To meet this demand, the trust has issued £151.5m of new stock over the past three years, growing its market capitalisation from £104m at launch to £298m at 2 August 2013.
So far in 2013, returns from emerging market equities have lagged those in developed markets. However, JPMorgan Global Emerging Markets Income Trust has substantially outperformed its benchmark over all periods, including year-to-date, up 3.85% between 31 December 2012 and 31 July 2013, compared with a 2.03% decline in the benchmark index.
Richard Titherington, who has managed the trust since launch and was joined in 2012 by Omar Negyal, said: "At the moment there is a lot of talk about emerging markets correcting, with developed markets like the US and Japan leading the charge this year. But all the factors supporting the continued success of emerging markets are still there: positive demographic factors and the emerging middle class are still themes that will play out over many years, regardless of what short-term GDP numbers look like in China. And with valuations on emerging market stocks falling to levels that are in many cases pretty cheap relative to history, we feel the opportunity in these markets is very attractive at present.
"Nevertheless, emerging markets investment can be volatile, and we feel that a strategy that targets income as well as capital appreciation is a good way to cut that volatility while ensuring we remain invested in companies that are run in the interests of shareholders, as well as management," added Titherington.
Simon Crinage, Head of Investment Trusts at J.P. Morgan Asset Management, said: "Until the recent launch of our closed-ended convertibles fund, JPMorgan Global Emerging Markets Income Trust was our biggest-ever initial public offering (IPO) in the UK. It has done fantastically well since then, trebling in size through a combination of investment growth and new issuance to meet demand, which continues to be very strong. We feel it perfectly illustrates how a closed-ended fund can fill a niche in an under-represented area. It pays quarterly dividends and is currently yielding 3.9% [based on share price at 2 August 2013], and the closed-ended structure has also allowed it to begin building a revenue reserve to protect its future dividend stream."
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Notes to Editors
About J.P. Morgan Asset Management
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$1.5 trillion in assets under management (the Asset Management client funds of JPMorgan Chase & Co. as at 30 June 2013) 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.
J.P. Morgan Asset Management is a trading name of J.P. Morgan Asset Management Marketing Limited, which has issued this material in the United Kingdom and which is authorised and regulated by the Financial Conduct Authority. Registered in England No. 288553. Registered office: 25 Bank Street, Canary Wharf, London E14 5JP.
Any past performance referred to in this material is not a guide to future performance and the value of investments, and any income from them, can fall as well as rise. Any tax concessions referred to are not guaranteed and their value will depend on the individual circumstances of investors. Stock market linked investments carry a number of inherent risks. These risks will increase where fluctuations in exchange rates impact on the value of any underlying investments or where the investment is exposed to smaller companies or emerging markets. Investments in fixed income securities that are not rated as investment grade represent a greater risk to an investor's capital.