LONDON: J.P. Morgan Asset Management looks to launch a new closed-ended fund investing in senior loans
Sep 17, 2013
J.P. Morgan Asset Management, the largest manager of investment trusts in the UK, has announced its intention to launch a London-listed investment company, offering investors access to a portfolio of senior secured loans with a focus predominantly on the US market.
The successful launch earlier this year of the JPMorgan Global Convertibles Income Fund underscored the strong demand in the marketplace for asset classes that can deliver high current rates of income. The new fund will target an initial dividend yield of 5%.
J.P. Morgan Asset Management, which has considerable experience managing loan portfolios for institutional investors globally, sees opportunities in the loan market to attain relatively high rates of current income, while offering some protection in a rising interest rate environment as well as potential capital appreciation. Loans are floating-rate instruments and thus provide a level of protection in a rising rate environment that may not be available from bonds, where coupons are typically fixed. However, similar to bonds, they offer investors the security of a regular income stream. They are also usually senior to bonds in a company's capital structure, often ranking first in priority of payment, which means they are less sensitive to changes in credit fundamentals and offer a greater level of capital and income security.
Loan portfolios cannot be held in open-ended fund structures such as OEICs and SICAVs, making the investment company structure the ideal conduit for bringing this strategy to a wider market. As the UK's largest manager of closed-ended funds, with more than £7 billion under management in 22 investment companies, J.P. Morgan Asset Management is well placed for the launch of a competitive loans proposition.
Simon Crinage, Head of Investment Trusts at J.P. Morgan Asset Management, said: "Bank loans are justifiably drawing attention because they offer a high regular income from a floating rate portfolio of senior securities, protecting investors from credit risk and the threat of rising rates. While the asset class may be less familiar to many UK investors, J.P. Morgan has a well-resourced team investing in this area. Senior members of the team have been managing high-yield bond and loan portfolios together for 25 years, and assets under management in these portfolios stood at US$35.9 billion as at 31 July 2013."
Full details of the investment company will be available in due course.
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Sarah Godfrey: Media Relations
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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.