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JPMorgan Asian seeks a total return from Asia Pacific ex Japan stocks, and owns a portfolio made up of the best ideas of a large proprietary research team. Country-level valuations are used to guide the PMs to shorter term tilts or where they look for ideas, but the main driver of returns is stock selection rather than industry or country bets.
Returns have been strong since J.P.Morgan combined its Emerging Markets and Asia Pacific teams and standardised its research process, with the fund outperforming in rising and falling markets.
The trust has paid out a dividend of 4% of NAV since October 2016, made up of quarterly payments of 1%, the majority of which comes from capital reserves. As a result, the trust has a similar payout to some income-focused portfolios in the combined open- and closed-ended Asia ex Japan peer group.
Gearing is applied depending on whether the managers, Ayaz Ebrahim and Richard Titherington see valuations as below average. At the moment the trust has net cash, with the managers believing that we have seen all the multiple expansions we are likely to see in this cycle, with earnings growth likely to drive performance. That said, they remain very optimistic about their market, and believe the recent pull back is a buying opportunity.
The discount has narrowed considerably since sentiment became positive to Asia in 2016 and since the board adopted the dividend policy. However currently trading at 9%, the discount is still wider than the sector average and has in fact widened out a bit in the 2018 sell-off. The board has a stated “acceptable” discount range of 8-10%.
The trust is also the cheapest closed-ended option in the space in terms of OCF, and amongst the cheapest in the combined open- and closed-ended sector.
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Fund History: JPMorgan Asian
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